As key palm oil exporting nations boost incentives for refined palm oil exports, India has witnessed an unprecedented rise in refined palm oil imports over the past five months. This surge threatens the domestic refining industry by leading to underutilised capacity and potential job losses. Additionally, it poses risks to farmers and consumers by driving down the farmgate prices of oilseeds
In response to the rising influx of refined palm oil imports, the Indian Vegetable Oil Producers’ Association (IVPA) has called on the government to increase the effective duty differential between crude and refined edible oils to 20 per cent, up from the current 8.25 per cent. The current differential is being eroded by higher export taxes on crude palm oil (CPO) from exporting nations, while refined palm oil (RPO) and its derivatives benefit from lower export duties, effectively subsidising their export.
This disparity has resulted in a sharp rise in refined palm oil imports into India, leading to underutilisation of domestic refining capacity. Data shows that from October 2024 to February 2025, India imported 8.24 lakh metric tonnes (MT) of RBD Palmolein, an 80 per cent jump compared to 4.58 lakh MT imported between June and September 2024. The share of refined palm oil in total imports rose from 14 per cent to nearly 30 per cent over these periods.
While these refined imports, priced about Rs 1–Rs 2 per litre lower, have benefited traders and distributors, the advantage to consumers has been minimal. However, the impact on the domestic refining industry has been significant, reducing capacity utilisation and destabilising the sector.
Exporting countries are promoting the shipment of value-added products by imposing higher levies on crude palm oil while lowering or removing duties on refined variants. This discourages value addition within India. Enhancing domestic refining would not only support the production of by-products like PFAD and palm stearin—key inputs for sectors like bakery, soaps, and oleochemicals—but also strengthen the overall ecosystem.
Presently, refined edible oils are exempt from the Agriculture Infrastructure and Development Cess (AIDC), whereas crude oils attract a 5 per cent AIDC. This reduces the effective duty gap from 12.5 per cent to just 8.25 per cent. To restore balance, IVPA has suggested applying a 10–15 per cent AIDC on refined oils, creating a more equitable environment that encourages domestic processing.
Furthermore, the association has urged the government to move refined edible oils to the “Restricted List,” as was done in the past during similar import surges. This would help control import volumes of finished products.
Implementing these policy changes would revitalise the refining sector, ensure steady demand for oilseeds, support fair farmgate prices for farmers, and protect thousands of jobs in the Rs 3 lakh crore edible oil industry.
