Policy and Tax Measures
SEA for uniform import duty, GST cut in Budget to reduce edible oil imports
This story was originally published at 22:39 IST on 29 January 2026
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NEW DELHI – The Solvent Extractors' Association has urged the government to announce a comprehensive set of policy and tax measures in the Union Budget 2026-27 (Apr-Mar) to reduce dependence on cooking oil imports and promote domestic production of oilseeds. The association urged for a uniform import duty across all crude edible oils, as the existing duty differences create market distortions in sourcing and substitution, undermining domestic refiners.
In a pre-Budget memorandum to the government, the association flagged India's rising structural dependence on edible oil imports, which currently account for around 60% of domestic consumption.
According to the association, India consumed 26.0 million tonnes to 26.5 million tonnes of edible oils in 2024-25, while domestic availability was limited to just 11.0 million tonnes to 11.5 million tonnes. The resulting gap of nearly 15 million tonnes to 16 million tonnes was met through imports valued at over $18 billion annually. The association said this deficit is no longer cyclical but structural, driven by low oilseed yields of 1,000–1,100 kg per hectare, well below global benchmarks.
Among its key proposals, the association called for a uniform reduction in customs duty across all crude edible oils, including rice bran and mustard oil, which currently attract significantly higher effective duties than palm, soybean, and sunflower oils. It said the differential duty structure creates distortions in sourcing and substitution, undermines a level playing field for domestic refiners, and dilutes the intended impact on price stability.
The association also sought immediate regulation of duty-free imports of refined edible oils from Nepal under the South Asian Free Trade Area, citing monthly inflows of 70,000 tonnes to 80,000 tonnes and said that they were hurting domestic refiners, depressing mandi prices for oilseeds, and leading to revenue losses. The association alleged misuse of rules of origin and recommended stricter enforcement, value-addition norms, import quotas, and canalisation through public sector agencies.
Raising concerns over the oleochemical sector, the association asked the government to curb nil or low-duty imports of finished products such as soap noodles, oleic acid, and stearic acid from South-East Asia, arguing that the inverted duty structure has severely affected domestic manufacturers. It proposed either restricting such imports, imposing higher duties, or introducing a minimum import price.
On the tax front, the association sought restoration of GST refunds on unutilised input tax credit under the inverted duty structure for edible oils, saying blocked credits of INR 4 billion to INR 5 billion across the industry have strained working capital and weakened competitiveness. It also recommended rationalising GST on de-oiled rice bran by levying a uniform 5% tax to curb mis-declaration and boost rice bran oil production by an additional 200,000 tonnes to 300,000 tonnes.
The association urged the government to earmark at least INR 50 billion in the Budget for creating a buffer stock of soybean under the Market Intervention Operation, noting that farmers continue to sell below the minimum support price of INR 5,328 per 100 kg due to procurement delays and strict quality norms.
The association further called for incentives to promote exports of oilmeal, a 15% remission of duties and taxes on exported products incentive on oilmeal exports to sustain crushing capacity, tax incentives for private participation in oilseed extension, and financial support for model farms that have demonstrated yield gains of 30–40%.
It also highlighted the potential to add around 1 million tonnes of edible oils by fully exploiting non-traditional sources such as rice bran, cottonseed, maize, and tree-borne oilseeds, and urged the government to exclude forest produce from the proposed India–EU free trade agreement.
The association said timely action on these recommendations in the Budget would help restore a level playing field, strengthen domestic processing, improve farmer incomes, and reduce India's long-term dependence on edible oil imports. End
Reported by Pallavi Singhal
Edited by Ashish Shirke
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