Food Oil Prices Soar Pre-Diwali: Import Duty Hike Impacts Household Budgets - Read Now

Food Oil Prices Soar Pre-Diwali: With Diwali 2024 knocking at the door, food oil prices in India have risen to haunt the pockets of both households and restaurants. The primary reason for this surge is the recent hike in import duties on the three key oils-crude palm, soybean, and sunflower oils, whose duty the government has hiked from 5.5% to 27.5% for crude oils and from 13.7% to 35.7% for refined oils. The above import duties are aimed at helping the local oilseed farmers but have increased the food oil prices in every nook and corner of the country visibly.

Why Food Oil Prices Are Rising
At a time when inflation is high, with India's retail inflation at a nine-month high of 5.5%, the recent spurt in food oil prices comes as a shock to most families, whose household budgets get significantly affected by palm oil price rise alone, which increased by 37% over the last month. Mustard oil, commonly used in Indian kitchens, witnessed a 29% increase during the same period. These increased costs are hence being reflected on the household levels and increasing production costs for restaurants and snack manufacturers, which rely on these oils for cooking and frying.

Global Oil Prices Adding Pressure
Global food oil prices are climbing, with crude palm oil up 10.6%, soybean oil 16.8%, and sunflower oil 12.3% over the past month. As the largest importer of edible oils, India relies on the global market for 58% of its requirement. Consumers will have to shell out a bit more for a couple of months at least, as import duty is unlikely to ease anytime soon.

Support for Local Farmer
That said, an increase in the import duty will support some efforts of the government from a standpoint of developing oilseed farmers within its native territory. This means there might eventually be a reduction of depending on imports with domestic productions. Industry experts, including the SEA's Executive Director, BV Mehta pointed that in case the import duty stabilizes, it then safeguards the farmer's remunerative price of the oilseed and increases farmer productivity.

India's food oil inflation, being both geographically driven and locally fuelled, is a challenge during the festive season. With the Muhurat session of Diwali 2024 near, increased costs weigh on the household expense bags while pushing toward a long-term goal of self-reliance in the edible oil sector.

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