India weighs vegetable oil import duty cut as prices rise

India, the world’s biggest vegetable oils importer, is considering lowering import taxes on the commodities to try to curb food inflation, two government and two industry sources said on Wednesday, as the peak demand festival season gets under way.

Prices of vegetable oils in India have climbed by nearly 20% over the last year and a measure that would lower their prices is likely to increase consumption as households mark festivals from September to November with sweets, snacks and fried treats.

Internationally, increased Indian demand would support benchmark Malaysian palm oil and U.S. soyoil futures, analysts say. India meets nearly two-thirds of its vegetable oil demand through imports, mainly palm oil, soyoil and sunflower oil from Malaysia, Indonesia, Argentina, Russia and Ukraine.

Prices have risen because of disruption linked to Russia’s war on Ukraine and extreme weather linked to El Nino and global warming. One of the government sources said the government was seeking to shield consumers, while protecting farmers’ interests.

A government spokesperson did not immediately respond to a request from Reuters for comment. India’s annual retail inflation accelerated further in August, driven by higher food prices. Instead of making a deep cut in import duties, the government could lower the basic import duty by 5%, which would keep local soybean prices above government-set support levels and support oilseed farmers, a senior industry official said.

Noting the risk that prices in exporting countries could rise as a consequence of India reducing import duties and spurring domestic demand, the industry official said cutting import duties was not an effective way to manage prices.

In May 2025, India halved the basic import tax on crude edible oils to 10%. That effectively lowered the total import duty on crude palm oil, crude soyoil and crude sunflower oil to 16.5%, as those oils are also subject to the Agriculture Infrastructure and Development Cess and Social Welfare Surcharge.

After the duty reduction, global palm oil and soyoil prices moved higher.