The Centre slashed the basic import duty on crude edible oils including palm, sunflower and soya to 10 per cent from the earlier 20 per cent effective May 31.
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The government’s move to slash import duty on crude edible oils is expected to reduce raw material costs for food companies starting Q2FY26. Players said that this could help lower raw material costs while offsetting higher costs of other commodities. Analysts believe it is also expected to lead to improvement in margins of consumer product companies in the coming quarters if the lower prices sustain.
In a move to taper down food prices, the Centre slashed the basic import duty on crude edible oils including palm, sunflower and soya to 10 per cent from the earlier 20 per cent effective May 31.
Abneesh Roy, Executive Director, Nuvama Institutional Equities noted that in dollar terms palm oil had corrected sharply from its peak, hence the government’s duty cut will be a “double benefit starting Q2FY26”. He said that companies such as Britannia, Nestle India and Bikaji Foods will be among the key beneficiaries.
“For snacks players….palm oil is almost 25–30 per cent of raw material costs. Even for other food companies , palm oil is a key raw material,” he said adding that this duty cut was being anticipated by the industry.
A senior industry executive noted that retail edible oil prices are expected to see a correction within the next few days, bringing relief to consumers.
It will also enable food products makers, for whom edible oil is a key raw material, to keep retail prices steady.
Mayank Shah, Vice-President, Parle Products said, “ This will benefit food companies in terms of lower raw material costs. With the Malaysian Ringgit seeing some appreciation in recent times, we anticipate the effective cost benefit to companies to be to the tune of ₹10-11 instead of ₹13-14. There is also expectation that some other commodities will see a price rise, so this duty cut on crude oil will help companies get a cushion in manging the overall raw material costs. Most importantly, this will help food companies to keep retail prices steady and not take any further price hikes.”
“Palm oil derivatives is also a key raw material for some other FMCG products such as soaps. Eventually companies HUL and GCPL may benefit if palm derivatives such as PFAD also cool down,” Roy noted in his report.
Published on June 2, 2025