In September last year, the duty on the import of edible oil was increased, and its effects have been felt continuously since then. Looking at the current year, edible oil prices have risen by Rs 3 to Rs 11. On the other hand, the import of edible oil has decreased this year. In February, the import of edible oil reached its lowest level in 4 years. Experts believe the main reason for the drop in imports is the high import duty.
There are also indications that the import duty may increase further in the coming days. The goal of increasing the import duty is to support local farmers. However, with reduced imports and lower stock levels, there is a possibility of further inflation in edible oil prices in the near future. Let’s first look at how much the import of edible oil has declined and how much the retail prices have increased this year.
Big Drop in Imports
According to media reports, India’s edible oil imports dropped to a four-year low in February, mainly due to a decline in imports of soybean oil and sunflower oil. However, palm oil imports increased from a nearly 14-year low in January. The lower-than-normal imports for the second consecutive month have reduced stocks, and India may need to increase purchases in the coming months. This could impact global palm oil and soybean oil prices.
Palm oil imports rose by 36% to 374,000 metric tons in February from the previous month, recovering from their lowest level since March 2011 in January. India had been importing over 750,000 tonnes of palm oil every month in the marketing year ending in October 2024. On the other hand, soyoil imports fell by 36% from the previous month to 284,000 metric tons, the lowest in eight months, while sunflower oil imports dropped 22% to 226,000 metric tons, the lowest in five months.
How Much Decline in Imports of Which Oil
Lower shipments of soyoil and sunflower oil caused India’s total edible oil imports to fall by 12% to 884,000 tons in February, the lowest since February 2021. High prices abroad and an excess supply of local edible oils led refiners to reduce imports. Estimates suggest that the lower imports in February have reduced edible oil stocks in India by 26%, to 1.6 million tonnes on March 1, the lowest in more than four years.
After unusually low imports in January and February, imports may start increasing from March. India mainly buys palm oil from Indonesia, Malaysia, and Thailand, while soyoil and sunflower oil are imported from Argentina, Brazil, Russia, and Ukraine.
Increase in Oil Prices
According to data from the Ministry of Consumer Affairs, vegetable oil prices increased by Rs 6 this year, with the price rising from Rs 170 to Rs 176. The price of soyoil went up by Rs 5, from Rs 158 to Rs 163. Sunflower oil prices saw an increase of Rs 11, rising from Rs 170 to Rs 181. Finally, palm oil prices increased by Rs 3, from Rs 143 to Rs 146.