The government on Tuesday scrapped tariffs and agricultural infrastructure development on imports of crude soybean oil and crude sunflower oil in a bid to curb rising cooking oil prices that are fueling food inflation. According to a statement from the Ministry of Finance, imports of 20 lakh metic tons (MT) each of crude soybean oil and crude sunflower oil per year will remain duty-free for a period of two years.

The tariff exemption for soybean and sunflower oil imports is expected to bring down cooking oil prices, which have risen to record highs in the recent past due to the conflict between Russia and Ukraine, which are one of the main producers. The four main edible oils, including palm, soybean, mustard and sunflower, account for 85-88% of total consumption in volume terms in India. Palm oil is mainly used by large food processing companies, while soybean oil, mustard oil and sunflower oil are mainly used for home consumption.

Adani Wilmar and Ruchi Soya are the biggest players in the branded oil business, contributing 12% and 6% respectively to the total oil consumption of 22 tons in India. The combined share of the top six players in the branded oils business (Adani Wilmar, Ruchi Soya, Emami, Cargill, Bunge and Marico) was estimated at around 40% in FY20.

In another development, Indonesia, the world’s largest palm oil producer, has announced it will lift its palm oil export ban after improving domestic supply. Palm oil imports account for more than half of India’s total imports in the vegetable oil segment. Indonesia supplies more than half of India’s cooking oil imports.