Palm oil prices likely to increase with new agri infra and development cess

New Delhi: Consumers will have to pay more for palm oil prices this month with the imposition of the 17.5% agriculture infrastructure and development cess, as announced in Budget FY 22 on Monday, industry executives said.

The increase has been cushioned with the reduction in the custom duty of crude palm oil (CPO) from 27.5% to 15%, they added.

"Palm oil prices will see an immediate increase of Rs 3.50 to Rs 4 a litre which will be passed on to the consumers. However, there will be no change in soyabean and sunflower prices as overall duties have not changed," said Angshu Mallick, deputy chief executive of Adani Wilmar that sells edible oil under the Fortune brand.


To meet its domestic demand of 23.5 million tonnes, India annually imports 13.52 million tonnes of vegetable oils and out of this 60% is palm oil from Indonesia and Malaysia.

Since April’2020 till date, palm oil prices in retail have increased by Rs 40-45 per litre to Rs 100 a litre and another increase of Rs 3-4 will not be huge, said Sudhakar Desai, president of Indian Vegetable Oil Producers Association. "The international markets are closed today and companies will have to see the global price trend before making the price correction," he said.

The Solvent Extractors' Association of India (SEA) said that as per their understanding effective import duty on CPO has gone up to 35.75% (+5.50%) while at the same time import duty on soya and sun oil has remained unchanged at 38.5%. "This decision of the government will help in containing import of palm oil and remove the undue advantage it had over soya and sun oil. This should help protect the interest of mustard farmers whose crop is ready for harvest," said Atul Chaturvedi, president of SEA.

Chaturvedi said that hopefully the revenue from cess on edible oils will be utilised for augmenting domestic production of oilseeds. "The industry was expecting the announcement of the starting of the national mission on edible oils in line with our Prime Minister's Vision of Atma Nirbharta," he said.