iGrain India - The high prices of edible oils in India, driven by a significant increase in import duties, are likely to reduce overall consumption despite strong seasonal demand.
The government raised import duties by 20-22 percent on edible oils in September 2024, which has already caused prices to rise by 10-15 percent over the last month. While the festive season and upcoming wedding season (Lagnasara) are expected to support strong demand, the increased prices may discourage some consumers from purchasing as much as they normally would.
India relies heavily on imports to meet its edible oil requirements, with about 60 percent of the domestic demand coming from abroad.
Due to the higher duties, Indian firms have reduced their imports in the past couple of months, resulting in a drop in the total import volume for the 2023-24 marketing season.
This, coupled with rising prices, may lead to inflationary pressure on edible oils, forcing consumers to either reduce their consumption or switch to alternative oils or fats.
During the Lagnasara season, which spans from November 2024 to June 2025 and includes a surge in weddings, the demand for edible oils typically spikes. However, industry analysts warn that higher prices could hinder the expected growth in consumption.
To mitigate these price impacts, many companies are gradually increasing the prices of oils in phases, with another round of hikes anticipated in the coming months.
These price increases, along with potentially lower import volumes, suggest that the price of edible oils could remain elevated in the near term, impacting affordability for the average consumer.
The scenario highlights a complex balancing act for Indian consumers, farmers, and the broader economy as the country navigates the dual challenges of maintaining sufficient supply and managing the affordability of a staple food product.