This decision is expected to have wide-reaching effects, with retail prices of edible oils potentially rising, which in turn could increase the prices of food in eateries and dampen consumer demand.
The move could also reduce imports of palm, soy, and sunflower oils. However, this hike provides a notable advantage for Indian farmers by preventing imported oils from undercutting domestic prices.
Industry leaders have shared their views on this development. Dorab Mistry, Director of Godrej International, praised the government, noting that the decision will boost confidence among soybean farmers.
According to him, the higher returns for soybean farmers could also motivate mustard farmers to plant more crops, achieving dual benefits. While consumers may face higher prices, Mistry emphasized the importance of supporting agriculture and reducing dependency on imports.
Sudhakar Rao Desai, CEO of Emami Agrotech, highlighted that the increase in duty aims to elevate seed prices, particularly ensuring that soybean prices rise above the Minimum Support Price (MSP).
Desai acknowledged that the oilseed sector might experience inflation of 10-13%, but deemed this necessary to support farmers.
From a procurement perspective, Somnath Chatterjee, Head of Procurement & Logistics, Foods Division at ITC, mentioned that the government has engaged oil refiners to delay passing on the duty cost to consumers immediately.
This buffer may last up to 45 days, but eventually, FMCG companies will need to reassess their pricing strategies as higher prices ripple through the supply chain.
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