Why the Centre cut import duty on crude edible oils ahead of the festival season
Cheaper cooking oil for the festivals, or a setback for India's oilseed farmers and its self-reliance mission?
Published 30 September 2026. Written by Pratidin from the reports linked at the end; every fact checked by a separate review before publishing. How we work
The Hindu's explainer of 30 September 2026 examines the Centre's decision to cut customs duties on edible oils. Under Notification No. 31/2026-Customs dated 23 September 2026, which took effect on 24 September, the basic customs duty on crude soybean oil and crude palm oil was halved from 10% to 5%, and on crude sunflower oil it was cut from 10% to nil. Duty on the refined versions was also lowered: refined soybean and palm oil from 32.5% to 27.5%, and refined sunflower oil from 32.5% to 22.5%. The government kept the effective duty gap between crude and refined oils at 19.25 percentage points, so that importing crude oil and refining it in India stays more attractive than importing refined oil.
The stated aim is to moderate prices ahead of the festival season after a sharp rise in international edible oil prices. The explainer notes that the FAO Vegetable Oil Price Index reached its highest level since June 2022 in August 2026. The Food Ministry issued an advisory asking edible oil associations to pass on the full benefit by revising the price to distributors and the maximum retail price, and Food Secretary Sanjeev Chopra repeated the message at the Solvent Extractors' Association meeting in Mumbai. India is the world's largest importer of edible oils: palm oil comes mainly from Indonesia and Malaysia and soybean oil from Argentina and Brazil. Imports meet about 57% of domestic demand, according to the government's 2024 mission document.
Duties on edible oils have swung often. On 14 September 2024 the basic duty on the three crude oils was raised from nil to 20% to support farmers; in May 2025 it was cut to 10%; now it is lower still. Farmers' groups argue that cheap imports depress domestic oilseed prices and undercut the National Mission on Edible Oils (Oilseeds), approved in October 2024 with ₹10,103 crore for 2024-25 to 2030-31, which aims to raise primary oilseed output from 39 million tonnes (2022-23) to 69.7 million tonnes by 2030-31. The government's view is that consumers need relief when global prices spike. The episode shows the classic trade-off between food inflation and farm incomes in tariff policy.
Prelims facts
- From 24 September 2026, basic customs duty on crude soybean and palm oil fell from 10% to 5%, and on crude sunflower oil from 10% to nil (Notification No. 31/2026-Customs).
- Refined soybean and palm oil duty fell from 32.5% to 27.5%, refined sunflower from 32.5% to 22.5%; the effective crude to refined gap stays at 19.25 percentage points.
- India imports about 57% of its edible oil needs and is the world's largest importer of edible oils.
- NMEO-Oilseeds (October 2024, ₹10,103 crore, 2024-25 to 2030-31) targets 69.7 million tonnes of primary oilseeds by 2030-31.
- Basic duty on crude edible oils was raised from nil to 20% in September 2024 and cut to 10% in May 2025.
Quick recall
- Notification that cut edible oil duties in September 2026?
- Notification No. 31/2026-Customs, dated 23 September 2026, effective 24 September 2026.
- New basic customs duty on crude palm and crude soybean oil?
- 5% (down from 10%).
- New basic customs duty on crude sunflower oil?
- Nil (down from 10%).
- Effective duty gap kept between crude and refined edible oils?
- 19.25 percentage points.
- Share of edible oil demand India meets through imports (2024 mission document)?
- About 57%.
- Outlay and period of NMEO-Oilseeds?
- ₹10,103 crore, 2024-25 to 2030-31.
- Primary oilseed production target under NMEO-Oilseeds?
- 69.7 million tonnes by 2030-31, from 39 million tonnes in 2022-23.
- Where is the oil palm native to?
- West Africa, though Indonesia and Malaysia are now the largest producers.
Prelims practice question
With reference to the customs duty changes on edible oils notified in September 2026, consider the following statements:
1. The basic customs duty on crude sunflower oil was reduced to nil.
2. The basic customs duty on refined palm oil was reduced to nil.
3. The effective duty differential between crude and refined oils was maintained.
Which of the statements given above are correct?
- 1 and 2 only
- 1 and 3 only
- 2 and 3 only
- 1, 2 and 3
Show answer
Answer: (b) 1 and 3 only. Statement 1 is correct: crude sunflower oil went from 10% to nil. Statement 2 is wrong: refined palm oil went from 32.5% to 27.5%. Statement 3 is correct: the 19.25 percentage point effective gap between crude and refined oils was kept to protect domestic refiners.
Use this in UPSC Mains: previous-year questions
Recurring theme: Food inflation, agricultural trade policy and self-reliance in oilseeds
- How to use this
Use it to show that part of food inflation is imported and supply-driven, which the government tackles with tariff tools rather than RBI interest rates.
- India imports about 57% of its edible oil needs; the FAO Vegetable Oil Price Index hit its highest level since June 2022 in August 2026, feeding domestic prices.
- From 24 September 2026 basic duty on crude soybean and palm oil was halved to 5% and crude sunflower oil cut to nil, ahead of the festival season.
- The Food Ministry asked edible oil associations to pass on the full benefit by revising distributor prices and MRPs, showing that transmission of relief is not automatic.
- How to use this
Use it to show border protection and mission funding as forms of support to oilseed farmers, and the tension between such support and consumer relief.
- Duty on crude edible oils was raised from nil to 20% on 14 September 2024 to support farmers, cut to 10% in May 2025 and to 5% or nil from 24 September 2026.
- NMEO-Oilseeds (October 2024, ₹10,103 crore for 2024-25 to 2030-31) aims to raise primary oilseed output from 39 million tonnes (2022-23) to 69.7 million tonnes.
- Farmers' groups argue cheap imports depress domestic oilseed prices; price deficiency payments or assured procurement can shield farmers when duties fall.
Palm oil is the biggest item in India's edible oil imports and a focus of the duty cut; the answer is (b) because the tree is native to West Africa.
Mains practice question
India's edible oil import duties have been raised and cut repeatedly since 2024. Examine the trade-off between consumer price stability and self-reliance in oilseeds, and suggest a more stable policy approach. (250 words)
Model answer
India meets about 57% of its edible oil demand through imports. In September 2026 the Centre cut basic duty on crude soybean and palm oil to 5% and on crude sunflower oil to nil, the latest in a series of changes since 2024.
Why duties were cut
- International prices rose sharply; the FAO Vegetable Oil Price Index hit its highest level since June 2022 in August 2026.
- Festival demand and food inflation: lower landed cost is meant to reach consumers, and the Food Ministry asked firms to revise MRPs.
- Keeping the crude to refined gap at 19.25 percentage points protects domestic refining.
Costs of frequent cuts
- Farmers' groups say cheaper imports depress domestic oilseed prices.
- Undercuts NMEO-Oilseeds (₹10,103 crore, 2024-25 to 2030-31), which targets 69.7 million tonnes of oilseeds by 2030-31.
- Policy volatility: nil to 20% (September 2024), 10% (May 2025), now 5% or nil, makes investment in crushing and seed systems risky.
Structural issues
- Low yields, rainfed cultivation and weak seed replacement.
- Dependence on a few suppliers: palm from Indonesia and Malaysia, soybean oil from Argentina and Brazil.
A more stable approach
- A rules-based tariff band linked to global prices, announced in advance.
- Price deficiency payments or assured procurement so farmers are shielded when duties fall.
- Faster oil palm expansion under NMEO-Oil Palm (2021, ₹11,040 crore) with ecological safeguards.
- Promote secondary sources such as rice bran and cottonseed oil.
Predictable tariffs combined with direct farmer support can protect both the kitchen budget and the goal of self-reliance.
The basics
Why this matters
Cooking oil is in every household budget, and India buys most of it abroad. So a customs notification can move kitchen prices, farm incomes and the trade balance at once. Understanding how edible oil tariffs work helps with Mains questions on food inflation, farm support and self-reliance.
How a customs duty is set
Basic customs duty rates sit in the First Schedule of the Customs Tariff Act, 1975. Under Section 25 of the Customs Act, 1962, the government can lower them by an exemption notification when it is satisfied that this is necessary in the public interest. That is how Notification No. 31/2026-Customs changed the rates overnight, with no Bill in Parliament. More in Customs duty and exemption notifications.
Why crude and refined are taxed differently
If refined oil could come in at almost the same duty as crude oil, Indian refineries would sit idle. A wide gap, called the Crude and refined duty differential, makes it cheaper to import crude oil and refine it at home, keeping value addition and jobs in India.
The duty roller coaster
- 14 September 2024Raised from nil to 20% to support farmers
- May 2025Cut to 10%; gap with refined oils widened to 19.25 points
- 24 September 2026Cut to 5% (palm, soybean) and nil (sunflower)
The self-reliance question
The National Mission on Edible Oils aims to cut this dependence by raising oilseed output. Low import duties help consumers today but make domestic oilseeds less competitive. Palm oil, the largest import, is a crop worth knowing in itself: see Palm oil.
Go deeper
In one line: To cool festival-season prices, the Centre cut basic customs duty on crude palm and soybean oil to 5% and on crude sunflower oil to nil from 24 September 2026, while keeping refined oils costlier to import.
Why it matters for UPSC
The story connects GS3 themes: food inflation, farm incomes and MSP, trade policy, and self-reliance in agriculture. Prelims can ask about rates, missions and palm oil; Mains asks about the trade-off.
The core idea
Tariffs are a lever the government moves quickly through Customs duty and exemption notifications. Lower duties cut landed costs for consumers, but the government protects refiners through the Crude and refined duty differential. The long-term fix is higher domestic output under the National Mission on Edible Oils, and much of the import basket is Palm oil.
Numbers and dates to remember
- Notification No. 31/2026-Customs, 23 September 2026; effective 24 September.
- Crude palm and soybean oil: 10% to 5%; crude sunflower oil: 10% to nil.
- Refined palm and soybean: 32.5% to 27.5%; refined sunflower: 32.5% to 22.5%.
- Effective crude to refined gap: 19.25 percentage points.
- Import dependence about 57%; NMEO-Oilseeds ₹10,103 crore.
Where to go next
- Customs duty and exemption notifications: how rates change without a Bill.
- Crude and refined duty differential: why refined oil is taxed more.
- National Mission on Edible Oils: the plan to cut import dependence.
- Palm oil: the crop behind India's biggest edible oil import.
Go deeper: consumers versus cultivators
For the cut. When global prices spike, a duty cut is the fastest way to lower landed cost. The Food Ministry backed it with an advisory to revise the price to distributors and MRPs. Keeping the Crude and refined duty differential means the cut does not hurt Indian refineries.
Against the cut. Farmers' groups say low duties make imported oil cheaper than domestic oilseeds, which can push domestic oilseed prices down. That weakens the incentive the National Mission on Edible Oils is trying to create. Frequent changes, from nil to 20% in September 2024, to 10% in May 2025 and to 5% or nil in September 2026, also make it hard for processors and farmers to plan.
Structural view. Economists often suggest a predictable tariff band tied to global prices, combined with direct support to farmers when prices fall below MSP. They also note that expanding oil palm is efficient in oil yield but raises ecological concerns in sensitive regions; see Palm oil.
Legal angle. Because rates change by notification under Customs duty and exemption notifications, the executive can respond within days. The flip side is less parliamentary scrutiny of decisions that affect millions of farmers.
Customs duty and exemption notifications
How the government changes import duty rates overnight.
In one line: Parliament sets the maximum customs duty rates in law, and the government lowers the actual rates through exemption notifications.
The legal structure
The Customs Act, 1962 is the charging law, and the Customs Tariff Act, 1975 lists the tariff rates for every product by its code in the First Schedule. Section 25 of the Customs Act lets the Central Government exempt goods from all or part of the duty by notification if it is satisfied that this is necessary in the public interest. Most day-to-day rate changes happen this way.
Layers of duty
Besides basic customs duty, imports may attract other levies such as cesses, so the effective duty differs from the basic rate. This is why the government speaks of an effective gap between crude and refined oils.
Why it is in the news
Notification No. 31/2026-Customs, dated 23 September 2026, cut edible oil duties from 24 September.
Where to go next
Crude and refined duty differential
The tariff gap that keeps oil refining in India.
In one line: Taxing refined oil more heavily than crude oil makes it cheaper to import crude oil and refine it in India.
How it works
Refining turns crude oil into cooking oil by removing impurities, colour and odour. If the duty on refined oil were close to the duty on crude oil, exporters in Indonesia or Malaysia could ship refined oil directly and Indian refineries would lose business. A large gap tilts the choice towards domestic processing.
The numbers
In May 2025 the government widened the effective gap from 8.25 to 19.25 percentage points, a step the Solvent Extractors' Association welcomed. In September 2026 it cut both crude and refined duties but kept the gap at 19.25 points.
The trade-off
A wider gap protects refiners and jobs, but consumers pay more for refined imports.
Where to go next
National Mission on Edible Oils
India's plan to cut its dependence on imported cooking oil.
In one line: Two missions, one for oil palm (2021) and one for other oilseeds (2024), aim to raise domestic edible oil output and cut imports.
NMEO-Oil Palm
Launched in 2021 with an outlay of ₹11,040 crore, it promotes oil palm cultivation, with a focus on the North-East and the Andaman and Nicobar Islands, and assures growers a viable price.
NMEO-Oilseeds
Approved by the Cabinet in October 2024 with ₹10,103 crore for 2024-25 to 2030-31. It aims to raise primary oilseed production from 39 million tonnes (2022-23) to 69.7 million tonnes by 2030-31, and domestic edible oil output to 25.45 million tonnes, meeting around 72% of projected demand. Focus crops are rapeseed-mustard, groundnut, soybean, sunflower and sesamum, with secondary sources such as cottonseed and rice bran. It plans 65 new seed hubs and 50 seed storage units.
Why it is in the news
Farmers' groups say repeated duty cuts undermine the mission's goal.
Where to go next
Palm oil
The crop behind India's largest edible oil import, and a UPSC favourite.
In one line: Palm oil comes from the fruit of the oil palm, a tree native to West Africa that is now grown mainly in Indonesia and Malaysia.
Why it dominates
The oil palm gives far more oil per hectare than most oilseed crops, which makes palm oil the cheapest major vegetable oil. It is used in cooking, processed food, soaps, cosmetics such as lipstick, and as a feedstock for biodiesel. UPSC asked about these uses in Prelims 2021.
India and palm oil
India buys palm oil mainly from Indonesia and Malaysia. Under NMEO-Oil Palm, India is expanding its own plantations. Critics warn that large monoculture plantations can harm biodiversity, as seen with deforestation in South-East Asia.
Why it is in the news
The September 2026 cut brought basic duty on crude palm oil down from 10% to 5%.
Where to go next
Prelims-style quiz
Consider the following statements about the September 2026 edible oil duty changes:
1. They were made through a notification, without an amendment passed by Parliament.
2. The basic duty on refined soybean oil was cut from 32.5% to 27.5%.
3. The duty on crude palm oil was reduced to nil.
How many of the statements given above are correct?- Only one
- Only two
- All three
- None
Show answer
Answer: (b) Only two. Statement 1 is correct: Notification No. 31/2026-Customs used the government's power under Section 25 of the Customs Act, 1962. Statement 2 is correct. Statement 3 is wrong: crude palm oil went to 5%; only crude sunflower oil went to nil.
Consider the following statements about the National Mission on Edible Oils:
1. NMEO-Oil Palm was launched in 2021 with an outlay of ₹11,040 crore.
2. NMEO-Oilseeds covers the period 2024-25 to 2030-31.
3. NMEO-Oilseeds aims to make India fully self-sufficient in edible oils by 2030-31.
4. Rapeseed-mustard, groundnut, soybean, sunflower and sesamum are among its focus crops.
How many of the statements given above are correct?- Only one
- Only two
- Only three
- All four
Show answer
Answer: (c) Only three. Statements 1, 2 and 4 are correct. Statement 3 is wrong: the mission expects domestic edible oil production of 25.45 million tonnes by 2030-31, meeting around 72% of projected demand, not full self-sufficiency.
Consider the following statements:
Statement-I: The government kept a wide duty gap between crude and refined edible oils when it cut duties in September 2026.
Statement-II: A wide gap makes importing crude oil and refining it in India cheaper than importing refined oil.
Which one of the following is correct in respect of the above statements?- Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
- Both Statement-I and Statement-II are correct and Statement-II does not explain Statement-I
- Statement-I is correct but Statement-II is incorrect
- Statement-I is incorrect but Statement-II is correct
Show answer
Answer: (a) Both Statement-I and Statement-II are correct and Statement-II explains Statement-I. Both are correct, and Statement-II gives the reason for Statement-I: the 19.25 percentage point gap protects domestic refiners and keeps value addition in India.
Which one of the following is the main source country group for India's palm oil imports?
- Argentina and Brazil
- Indonesia and Malaysia
- Russia and Ukraine
- Canada and Australia
Show answer
Answer: (b) Indonesia and Malaysia. India buys palm oil mainly from Indonesia and Malaysia; soybean oil comes mainly from Argentina and Brazil.
Under which provision can the Central Government reduce customs duty rates by notification in the public interest?
- Article 265 of the Constitution
- Section 25 of the Customs Act, 1962
- Section 3 of the Foreign Trade (Development and Regulation) Act, 1992
- Article 110 of the Constitution
Show answer
Answer: (b) Section 25 of the Customs Act, 1962. Section 25 of the Customs Act, 1962 allows exemption notifications in the public interest. Article 265 requires taxes to have legal authority, Article 110 defines Money Bills, and the FTDR Act deals with import and export policy, not duty rates.