In recent months, India’s edible oil landscape has come under renewed stress. Between October 2024 and February 2025, the country witnessed an 80% surge in imports of refined palm oil, raising alarms within the domestic refining sector. The Indian Vegetable Oil Producers’ Association (IVPA) is now calling for urgent policy intervention, warning that the influx of low-cost, pre refined oil is not only threatening industrial capacity and jobs but also undermining the economics of India’s oilseed farmers.
At the centre of this call is IVPA’s recommendation to the government: increase the net effective duty differential between crude and refined edible oils to 20%, up from the current 8.25%. The association believes that this adjustment is essential to offset the structural disadvantages imposed by global trade practices, particularly from major exporting countries that apply high export levies on crude palm oil (CPO) while subsidising refined variants through lower or zero duties.
A Shift in Import Dynamics
Data from IVPA reveals a stark change in import patterns. During June to September 2024, India imported 4.58 lakh metric tonnes (MT) of RBD palmolein, constituting around 14% of total palm oil imports in that period. In the following five months, from October 2024 to February 2025, this figure nearly doubled to 8.24 lakh MT, comprising nearly 30% of overall palm oil imports.
This rising influx has had ripple effects across the refining ecosystem. With refined oils entering the market at just Rs 1–2 per litre lower than crude counterparts, the primary beneficiaries have been traders and the distribution network. However, IVPA notes that the price benefit to end consumers is marginal, while the impact on domestic refiners has been disproportionately severe. Refining capacities are underutilised, and the cascading effect is being felt in employment figures and farmgate prices.
“By levying high export duties and taxes on crude palm oil (CPO) and imposing lower or zero duties on refined palm olein (RPO), palm oil exporting countries are incentivising the export of finished goods and discouraging value addition in India,” the association stated.
Collateral Damage: Ancillary Sectors and Farmers
The issue extends beyond refiners. As crude oil refining declines, so does the production of critical by-products like palm fatty acid distillate (PFAD) and palm stearin, both essential raw materials for industries such as bakery, oleochemicals, and soap manufacturing. This reduction in local availability threatens to disrupt input chains in multiple ancillary sectors.
Moreover, IVPA highlights the risks to Indian oilseed farmers. A weaker domestic refining sector could lead to a drop in demand for local oilseeds, pushing down farmgate prices and exacerbating income insecurity in agricultural communities. In a INR 3 lakh crore industry that supports thousands of direct and indirect jobs, the stakes are high.
Policy Asymmetry and Recommendations
A key structural concern lies in the application of the Agriculture Infrastructure and Development Cess (AIDC). Currently, crude edible oils attract a 5% AIDC, while refined oils are exempt. This has effectively narrowed the duty differential from the previously intended 12.5% to just 8.25%. To address the imbalance, IVPA has proposed introducing a 10–15% AIDC on refined oils.
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The association has also recommended that refined edible oils be moved to the “Restricted List”, a regulatory status invoked in the past when import surges threatened domestic production. Such a move would enable better control over import volumes and allow the domestic industry to recover equilibrium
In what the association considers a responsive measure, the government recently reduced the basic import duty on crude edible oil from 20% to 10% while keeping refined oil duties at 35.25%. IVPA President Sudhakar Desai welcomed the move, noting that it increases the duty differential to 19.25%.
“We thank the government for accepting the IVPA recommendation to increase the duty differential between crude and refined edible oil to 19.25%. It is a bold move towards ensuring Make in India and also protecting the sector from the influx of refined oils causing capacity injury to the vegetable oil sector. This move will not just strengthen the domestic refining capacities of Indian refiners but also ensure fair price to oilseed farmers and a fair price to the consumers.”
Desai emphasised that the policy shift would help strengthen the refining capacities of Indian processors, ensure better price realisation for oilseed growers, and deliver equitable outcomes for consumers. He credited IVPA’s persistent engagement with policymakers, particularly regarding distortions introduced by the South Asian Free Trade Area (SAFTA). Under SAFTA, neighbouring countries had been exporting refined oils into India at zero duty, leveraging a structural advantage that undermined domestic processing.
The Road Ahead
IVPA maintains that further corrective measures are needed to restore competitiveness to Indian refiners and safeguard the broader edible oil economy. Without intervention, continued imports of low-cost, refined oils risk displacing value addition from Indian soil, leaving refiners, farmers, and related industries vulnerable. For a sector that contributes significantly to the rural economy, supports industrial employment, and meets essential nutritional needs, the challenge is not just commercial, it is systemic.
