Economy
Basic Customs Duty on Edible Oils
GS3 Economy · Inflation and trade policyGS3 AgriculturePrelims and Mains
- Why in news
- On 24 September 2026 the Government cut Basic Customs Duty on crude sunflower, soybean and palm oil to ease prices, and kept the crude-refined gap at 19.25%.
- What it is
- Basic Customs Duty (BCD) is a tax on imports levied under the Customs Act, 1962 and the Customs Tariff Act, 1975. India imports a large share of its edible oil needs, so import duty changes directly affect landed cost and retail prices. The government uses duty changes on crude and refined oils to balance consumer prices, farmers' interests and domestic refining.
- Sunflower oil cut
- BCD on crude sunflower oil was cut from 10% to nil.
- Soybean and palm oil
- BCD on crude soybean oil and crude palm oil was cut from 10% to 5%.
- Industry advisory
- Industry was asked to revise Price to Distributors and MRP at once to pass on the benefit.
- Legal basis
- Customs duty is levied under the Customs Act, 1962 and the Customs Tariff Act, 1975.
Don’t confuse with Basic Customs Duty vs Agriculture Infrastructure and Development Cess: BCD is the base import tax; the cess is a separate levy added on some goods, including edible oils, and is not the subject of this cut.
Economy terms and data: 42 Prelims questions since 2013, rising in recent years; they test what a term or instrument means. In Mains, 12 news-triggered questions.
Why it matters
- Lowers landed cost and eases food inflation for households.
- Keeping the differential protects domestic refiners and value addition.
Problems
- Lower duty can hurt domestic oilseed farmers by pulling down prices.
- Pass-through to retail prices is uncertain and depends on industry.
- Heavy import dependence leaves India exposed to global price swings.
Way forward
- Expand domestic oilseed output, for example through the National Mission on Edible Oils.
- Calibrate duties and monitor prices to balance consumers, farmers and refiners.
Put in your answer
Price monitoring: The Government says it will keep monitoring international and domestic prices and act as needed.
- 2014Mains GS2 · Q17Impact of zero tariffs on IT products for India's interests.
- 2018Prelims Q10Whether edible oil imports exceed domestic production, and whether all imports are duty-free.
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
Prelims practice · Statement I and II
Ours, not from a UPSC paper
Consider the following two statements about the recent change in import duty on edible oils in India:
- Statement-I: The Government has reduced Basic Customs Duty on crude sunflower oil from 10% to nil and on crude soybean oil and crude palm oil from 10% to 5%.
- Statement-II: The Government has maintained a 19.25% import duty gap between crude and refined edible oils to support domestic refining and discourage excessive imports of refined oils.
Which one of the following is correct in respect of the above statements?
True or false?
1 of 7
Statements the way Prelims prints them. Say first, then see the fact.
1.The Government has reduced Basic Customs Duty on crude sunflower oil from 10% to nil.
True. Crude sunflower oil BCD went from 10% to nil.
2.BCD on crude palm oil and crude soybean oil has been reduced to nil.
False. They were reduced from 10% to 5%, not nil.
3.The duty differential between crude and refined edible oils has been maintained at 19.25%.
True. The gap stays at 19.25%.
4.The differential is meant to encourage import of refined edible oils over crude oils.
False. It supports domestic refining and discourages excess refined oil imports.
5.Customs duties on imports in India are levied under the Customs Act, 1962 and the Customs Tariff Act, 1975.
True. These two Acts provide the legal basis for customs duty.
6.A cut in import duty on a commodity generally raises its landed cost in the domestic market.
False. A duty cut lowers landed cost, as the release expects.
7.The Government has asked industry to revise Price to Distributors and MRP to pass on the duty cut to consumers.
True. An advisory asks for immediate price revision.
Written by us from the release, not by UPSC; checked by a second model.
Source: PIB, Ministry of Consumer Affairs, Food & Public Distribution, 24 Sep, 12:43 IST · Release 295184
Issue page →Worth revising until Prelims 2028: most news questions come within two years of the event.