India's Duty Regime: What Changed, What's Working, What's Next

POLICY & REGULATION

On 30 May 2025, the Government of India notified a reduction in basic customs duty on crude palm oil, crude soybean oil, and crude sunflower oil — from 20 percent to 10 percent, effective immediately. Combined with applicable cesses, effective duties on crude edible oils fell to approximately 16.5 percent. Refined oil duties (palm olein, soybean, sunflower) remained at 32.5 percent effective.

Ten months on, the effects are visible — but not uniformly in the directions policymakers intended. This is the state of play heading into GLOBOIL India 2026.

The duty history, compressed

India's edible oil import duty regime has whiplashed over the last five years. A condensed timeline:

• 2021-2022: Emergency cuts to near-zero duties to combat pandemic-era food inflation.

• June 2023: Basic customs duty on refined sunflower and soybean oils reduced from 17.5% to 12.5% to align with RBD palm olein.

• March 2024: Lower-duty window originally due to expire, extended to March 2025.

• 14 September 2024: Basic customs duty on crude edible oils raised from 0% to 20% (effective duty 27.5%). Refined oils raised from 12.5% to 32.5% (effective duty 35.75%). Policy rationale: support Indian oilseed farmers as MSP support faltered.

• 30 May 2025: Basic customs duty on crude oils cut back from 20% to 10% (effective duty 16.5%). Refined oils left unchanged. Rationale: ease retail food price inflation.

The 20-percentage-point swing over nine months was a significant policy shock for refiners, importers, and edible oil trading desks.

The duty differential between crude and refined oils rose to roughly 16 percentage points — the widest margin for domestic refiners in three years.

The intended outcome vs the actual outcome

The September 2024 hike was designed to support farm-gate prices for Indian oilseeds, particularly soybean and mustard. On that metric, it largely failed. Industry analysis published through Q1 2025 found that oilseed prices remained below minimum support price (MSP) despite the duty wall — a repeat of outcomes observed in previous hike cycles. The duty hike could not override the weight of cheaper international prices or the behavioural inertia of Indian oilseed farmers holding stocks back.

The May 2025 cut on crude oils, meanwhile, was designed to ease retail prices. On that metric, the results have been partial. Palm oil retail prices, which had risen 34% year-on-year to approximately ₹134 per litre by mid-2025, did ease by late summer 2025 as the duty-cut transmission worked through. But sunflower oil retail prices stayed elevated, reflecting Ukraine-specific supply disruption. Mustard oil prices remained above ₹170 per litre — immune to the crude-oil duty cut because mustard is a domestic oil.

The net effect of the May 2025 adjustment was a duty differential of roughly 16 percentage points between crude and refined oils — the widest margin for domestic refiners in three years. That differential, more than any other single policy signal, has favoured Indian crushing and refining capacity expansion plans through late 2025 and 2026.

Current state (as of April 2026)

As of this publication, the duty structure stands as follows:

• Crude palm oil, crude soybean oil, crude sunflower oil: basic customs duty 10%, effective duty ~16.5%

• Refined palm olein, refined soybean oil, refined sunflower oil: basic customs duty ~27.5%, effective duty ~32.5%

The 16-percentage-point gap has preserved margin for Indian refiners. Refined palm olein imports as a share of total palm oil imports have begun to moderate from their 2024-25 peak (which had exceeded 27% of palm volumes in H1 2024-25, up from 20% in the full 2023-24 marketing year).

What to watch in 2026

Three policy pressure points are worth monitoring:

1. Post-B50 review

If Indonesia's B50 tightens global palm supply as expected from Q3 2026, retail palm oil prices in India may rise through late 2026. A duty cut to soften the impact is politically possible — though unlikely before the 2027 fiscal cycle.

2. NMEO-Oilseeds progress check

The National Mission on Edible Oils – Oilseeds (NMEO-OS), approved in 2024, targets 72% self-sufficiency in edible oils by 2030-31. Progress milestones are expected through 2026. Slow progress could trigger renewed duty support; faster progress could open room for calibrated cuts.

3. EU–India trade context

Ongoing EU–India FTA negotiations include agricultural trade. Any commitment on refined oil tariffs in that context could reshape the duty regime.

The practical implication

For 2026, the duty regime favours continued crude oil imports and domestic refining. Forward-cover strategies should assume this structure holds through the 2026 marketing year at minimum. A 10-percentage-point swing in either direction cannot be ruled out, but the political conditions for a major shift are not currently present.

GLOBOIL India 2026's government and policy stream will feature direct engagement with India's edible oil policy community — including the CEOs who have the most visibility into where the duty debate is heading next.