Indias Edible Oil Industry Seeks Long Term Tariff Stability

Indias Edible Oil Industry Seeks Long Term Tariff Stability

Last Updated Oct - 14 - 2025, 06:22 PM | Source : Fela News

Frequent duty changes disrupt prices and investment experts urge predictable multi year tariff policy.

India’s edible oil industry is sounding a warning: frequent swings in import duties are eroding investor confidence, driving unpredictable price swings, and undermining efforts toward food security. A new joint study by JNU’s Centre for Economic Studies, VeK Policy Advisory & Research, and Assocham argues that a more stable, multi year tariff framework is urgently needed to steady the ship. 

Since 2015, the country has changed edible oil tariffs more than 25 times a pattern that the study suggests is hurting everyone from global suppliers to cooks in middle class households. The constant back-and-forth encourages short-term thinking, rather than long-horizon investments in refining capacity, efficient supply chains, or diversified sourcing.

India, after all, is the world’s largest importer of cooking oil with palm oil alone making up around 60 percent of those imports. That heavy reliance magnifies the risks whenever import duties or global supply conditions shift. When duties are hiked, prices at the pump (or in the kitchen) jump sharply. When they are cut, the relief trickles down slowly, if at all  because supply chains, contracts, and market expectations are already baked in. 

Refiners struggle with margin uncertainty as the “crude to refined” duty differentials fluctuate. FMCG firms find it hard to fix pricing strategies when their raw material costs ebb and flow. And international producers hesitate to commit, since demand from India might change on a whim. 

The study recommends several practical fixes, leaning heavily on predictability. One is a banded tariff structure that can be adjusted only modestly within predetermined limits over multiple years, instead of abrupt swings. Another is building a robust data infrastructure an integrated oil-market portal tracking global prices, imports, demand, and retail prices, possibly with AI forecasting tools for policy simulations and early warning. 

Importantly, the authors urge periodic stakeholder consultations: before any tariff change, regulators should formally hear from industry players, farmers, trade bodies, refiners, and consumer groups. The study also suggests encouraging hedging and futures trading to manage price risk, and offering technical support to small-scale refiners. 

If adopted, these reforms could help India make better use of refining capacity, reduce its dependency on imports, stabilize consumer prices, and attract long-term investments. In short a shift from reactive policy tinkering to strategic, rules-based policymaking could be the turning point for India’s edible oil sector.

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