India Considers Lowering Vegetable Oil Import Tax to Curb Food Inflation

Key facts

• India, the world's biggest vegetable oil importer, is considering lowering import taxes on vegetable oils to curb food inflation as the peak demand festival season gets under way.
• Prices of vegetable oils in India have climbed by nearly 20% over the last year, and a price-lowering measure is likely to increase consumption as households celebrate festivals from September to November with sweets, snacks and fried treats.
• The price rise has been driven by disruption linked to Russia's war on Ukraine and extreme weather linked to El Nino and global warming.
• India meets nearly two-thirds of its vegetable oil demand through imports, mainly palm oil, soyoil and sunflower oil from Malaysia, Indonesia, Argentina, Russia and Ukraine.
• Instead of a deep cut in import duties, the government could lower the basic import duty by 5%, which would keep local soybean prices above government-set support levels and support oilseed farmers.
• In May 2025, India halved the basic import tax on crude edible oils to 10%, effectively lowering the total import duty on crude palm oil, crude soyoil and crude sunflower oil to 16.5% through the Agriculture Infrastructure and Development Cess and Social Welfare Surcharge.
• India's annual retail inflation accelerated further in August, driven by higher food prices.