Patanjali Foods, AWL, Coromandel Agro Stocks To Trend: Custom Duty On Imported Crude Edible Oils Cut To 10%

Edible oil stocks will be in focus on Thursday, June 12 after the government trimmed customs duty on crude edible oils from 20% to 10%. These stocks are Patanjali Foods, Marico, AWL Agro, Coromandel Agro, and others.

On June 11, the government of India announced that it reduced the Basic Customs Duty (BCD) on crude edible oils namely crude sunflower, soybean, and palm oils has been reduced from 20% to 10% resulting in the import duty differential between crude and refined edible oils from 8.75% to 19.25%.

"This adjustment aims to address the escalating edible oil prices resulting from the September 2024 duty hike and concurrent increases in international market prices. An advisory has been issued to edible oil associations and industry stakeholders to ensure that the full benefit of the reduced duty is passed on to consumers," said the Ministry of Consumer Affairs, Food & Public Distribution.

According to the ministry statement, import duty on edible oils is one of the important factors that impacted landed cost of edible oils and thereby domestic prices. By lowering the import duty on crude oils, the government aims to reduce the landed cost and retail prices of edible oils, providing relief to consumers and helping to cool overall inflation. The reduced duty will also encourage domestic refining and maintain fair compensation for farmers.

The revised duty structure will discourage the import of refined Palmolein and redirect demand towards Crude Edible Oils Especially Crude Palm Oil, thereby strengthening and revitalizing the domestic refining sector. This significant policy intervention not only ensures a level playing field for domestic refiners but also contributes to the stabilization of edible oil prices for Indian consumers, it said.

Furthermore, the ministry said, industry stakeholders are expected to adjust the Price to Distributors (PTD) and the Maximum Retail Price (MRP) in accordance with the lower landed costs with immediate effect. The Associations have been requested to advise their members to implement immediate price reductions and share the updated brand-wise MRP sheets with the Department on a weekly basis. DFPD shared the format with edible oil industry for sharing the reduced MRP and PTD data.

This decision comes after a detailed review of the sharp rise in edible oil prices following last year's duty hike. The increase led to significant inflationary pressure on consumers, with retail edible oil prices soaring and contributing to rising food inflation.

The timely transmission of this benefit to the supply chain is imperative to ensure that consumers experience a corresponding decrease in retail prices.