Import duty was slashed for edible oils, but what happened to retail prices?

On the other hand, industry experts Mint spoke with attributed the delay to supply chain challenges and a lag for imported consignments to reflect on retail shelves, and expect price reductions to happen by late June.

“They have been clearly instructed to reduce the prices of edible oil so that the benefits of the duty cut can reach consumers," said the first person cited above, adding that the ministry has communicated this in a recent meeting with industry leaders.

“Those who fail to comply will face action, as the government reduces duties to benefit consumers by cooling domestic inflation and easing pressure on household budgets—not to enable oil companies to make extra profits," said the second person.

The Centre had reduced basic customs duty on imported crude sunflower, soybean and palm oil from 20% to 10% on 30 May.

Also read | Industry group urges edible oil makers to pass on duty cuts to consumers

However, retail prices of some edible oils have marginally increased in the month since the duty cut. The prices are also significantly higher–between 21.3% (soybean oil) and 31.6% (sunflower)–than a year before for most edible oils.

In the meeting mentioned above, edible oil manufacturers acknowledged that they were receiving crude edible oil at reduced rates and expressed their willingness to pass on the benefits to consumers. However, they pointed out that certain supply chain issues need to be addressed first.

In response, a senior official from the consumer affairs ministry asked the companies to develop a mechanism to immediately implement the benefit of the duty cut in retail prices, according to the first person.

The consumer affairs ministry did not respond to Mint’s queries till press time.

Speaking toMintover phone, Sudhakar Desai, president of the Indian Vegetable Oil Producers’ Association (IVPA) said that prices are expected to come down next week, and their impact on retail inflation will be visible in the June data that will be released in July.

Read this | Mint Primer: Rise and fall of edible oil duties: Who benefits?

According to the consumer affairs ministry’s price monitoring data, the all-India average retail price of sunflower oil on 16 June was ₹160.19 per litre, up from ₹121.76 per litre a year ago. Soybean oil prices rose to ₹146.61 per litre from ₹120.82 per litre, and palm oil saw a sharp increase to ₹131.36 per litre from ₹99.97 per litre in the same period.

Meanwhile, vanaspati was retailing at ₹155.93 per litre, up from ₹124.09 per litre last year, and groundnut oil was ₹188.35 per litre, slightly up from ₹185.91 per litre recorded a year ago.

Industry reactions

“Despite the cut in basic customs duty, consumers are likely to see a reduction in edible oil prices on retail shelves only between 20 and 25 June," said Desai, who is also the chief executive officer of Emami Agrotech Ltd, which produces edible oil under the Emami brand. “It takes some time for the products with updated price tags to move through the supply chain and reach the market."

The pricing transition involves multiple stages—importers, processors, wholesalers, and retailers—each of whom takes time to adjust to the revised cost structure. Revised labelling and printing of updated maximum retail prices (MRPs) also contribute to the delay, as explained by Desai.

“The manufacturers have already started reducing prices," said B.V. Mehta, executive director of Solvent Extractors Association of India (SEA). “We expect that in the next 15 days, the consumers may witness reduced prices across all brands."

Also read | Strong oilseed crop to keep India edible oil prices stable: AWL Agri Business

According to an industry executive who wished not to be named, it typically takes around 20 to 25 days for freshly refined edible oil to reach retailers from manufacturers, which is one of the main reasons for the delay in the reduction of prices.

The customs duty cut from 20% to 10% on crude edible oils like palm, soybean, and sunflower is expected to lower wholesale prices by about ₹10 per litre, according to people from the sector. Once this drop filters through the supply chain, retail prices could decline by ₹5-7 per litre, said the industry executive mentioned above.

However, manufacturers have also expressed concern over the ongoing Israel-Iran conflict, as rising crude oil prices could push up the cost of edible oils as well.

India imports about 60% of its domestic edible oil requirements from countries such as Indonesia, Malaysia, Argentina, Brazil, and Thailand, among others.

And read | India’s love for oily food triples edible oil use, leads to import surge