Vijayawada: The recent increase in customs duties on crude edible oils—specifically soybean, sunflower, and palm oil—has caused a sharp rise in prices across India, including Andhra Pradesh. This price surge, occurring just before the festive season, is causing concern among consumers and traders.
The cost of edible oils has jumped by over 20%, adding to the financial strain on households already struggling with inflation. This hike is expected to increase the price of daily essentials, such as tiffins and other oil-based food items.
In response to anticipated higher prices, some black marketeers have started hoarding oil, creating an artificial demand that could worsen the situation during the festive season.
The Finance Ministry recently raised the basic customs duty on various edible oils, effective from Saturday. The duty on crude palm, soybean, and sunflower oils has increased from 0% to 20%, while duties on their refined counterparts have surged from 12.5% to 32.5%.
While the government argues that this move will benefit domestic farmers by increasing their income, the immediate consequence has been a steep rise in prices, putting a strain on consumers.
Retailers and wholesalers are also feeling the impact. S. Rajesh Reddy, owner of Damodara Oil Mill in Kurnool Industrial Estate, expressed concern over declining sales due to the price hike.
“This increase will affect sales during the festive season. We’ll see the real impact after Monday, which is a festival,” Reddy told TNIE.
Reddy noted that while palm oil production has benefited from government incentives, sunflower oil production remains minimal, making price fluctuations more significant. He also mentioned that while soybean oil is popular among migrants from northern India, it has little demand in the southern states.
In Vijayawada, housewife Kusuma Kumari voiced her worries about the rising prices. “With oil prices increasing by more than Rs 20 per litre, managing household expenses is becoming difficult. We may have to reduce our consumption if this continues,” she said.
Retailer M. Vikram, owner of Mahindra Dry Fruit and General Stores, observed that wholesalers have already raised prices by Rs 22 per litre for most oil varieties. Although sales are expected to continue, he noted the added burden on consumers, exacerbated by limited stock availability.
Duty Hike to Benefit Oilseed Farmers
The Finance Ministry's recent decision to increase the basic customs duty on various edible oils—raising the duty on crude palm, soybean, and sunflower oils from 0% to 20%—is intended to boost domestic farmers' incomes. However, this move has led to a sharp price increase that is impacting consumers negatively.