India Increases Duties on Olive Oil Again

The Indian government continues its trend of raising import duty rates on olive oil.

Apr. 3, 2018
By Isabel Putinja

Recent News

On February 1, Indian finance min­is­ter Arun Jaitley announced that duties for extra vir­gin and vir­gin olive oil were increas­ing from 12.5 per­cent to a whop­ping 30 per­cent, while those for refined olive oil (olive oil and olive pomace oil) would jump from 20 to 35 per­cent.

These duties are exces­sive look­ing at the fact that India doesn’t pro­duce any com­mer­cial level olive crop.- Rahul Upadhyay, Indian Olive Association

Olive oil was included on a long list of edi­ble veg­etable oils sub­ject to the increase which also included ground­nut (peanut), cot­ton­seed, saf­flower seed, saf­fola, coconut, palm ker­nel, lin­seed, corn, cas­tor and sesame oils.

While some praised the gov­ern­men­t’s move as a way to safe­guard the inter­ests of domes­tic pro­duc­ers, the Indian Olive Association (IOA) called the increase exor­bi­tant and extra­or­di­nary”. There is no domes­tic pro­duc­tion of olive oil in India; hence there are no domes­tic farm­ers who are affected by olive oil imports or who need pro­tec­tion,” the asso­ci­a­tion stated in a press release dated February 1.

The IOA press release also points out other rea­sons the move is illog­i­cal when it comes to the olive oil indus­try. While prices of other types of edi­ble oil have declined in India in recent years, the cost of olive oil from sup­plier coun­tries like Spain and Italy has increased in the past two years because of a fall in pro­duc­tion. Also, the appre­ci­a­tion of the Euro against the Rupee has resulted in an even higher cost for Indian importers.

Indian import duties imposed on olive oil have been steadily increas­ing since 2014 when the gov­ern­ment launched its Made in India” pro­gram with the aim to encour­age domes­ti­cally man­u­fac­tured goods. Duties on olive oil increased from 0 per­cent for crude oil and 7.5 per­cent for refined oil in 2013, to 7.5 and 15 per­cent respec­tively in 2015, before fur­ther ris­ing to 12.5 and 20 per­cent in 2017.

The newly intro­duced rates for 2018 of 30 and 35 per­cent are also sub­ject to an addi­tional 10 per­cent import cess.” Rahul Upadhyay, vice-pres­i­dent of the IOA, told Olive Oil Times that these duties are exces­sive. Today the duties includ­ing the new 10 per­cent import cess intro­duced in February 2018 are 33 per­cent on crude vari­ants like extra vir­gin and vir­gin, and almost 39 per­cent on refined vari­ants like olive oil and olive pomace oil,” he con­cluded. These duties are exces­sive look­ing at the fact that India doesn’t pro­duce any com­mer­cial level olive crop. However, the Indian gov­ern­ment is not dif­fer­en­ti­at­ing olive oil from other oils. India imports 65 per­cent of its edi­ble oil require­ment where the major share is that of palm, sun­flower and soy­bean oils.”

The increased cost of olive oil from source coun­tries, the strong Euro, and record import duty rates mean Indian con­sumers can expect higher prices at the super­mar­ket. For olive oil it’s a triple whammy that has increased the retail prices sub­stan­tially,” added Upadhyay. Prices on retail shelves are almost 50 to 60 per­cent higher than last year and will go up fur­ther due to this recent cus­tom duty increase.”


The IOA has asked the Indian gov­ern­ment to reduce the import duties on olive oil, cit­ing the fact that there are no domes­tic olive pro­duc­ers to pro­tect while also point­ing out the poten­tial health ben­e­fits of olive oil in a coun­try that ranks first in the world for car­diac dis­ease and dia­betes.

The government’s effort should be to make the prod­uct increas­ingly acces­si­ble to the Indian con­sumer given its over­ar­ch­ing and uni­ver­sally accepted health ben­e­fits. Instead, it’s mis­con­ceived and mis­guided actions are result­ing in exactly the oppo­site,” con­cluded the asso­ci­a­tion’s February 1st press release.

Despite the ever-increas­ing cost of olive oil in recent years, sales in India have sur­pris­ingly not fallen and actu­ally remained sta­ble, con­firmed Upadhyay. It is evi­dent that there seems to be a short-term impact in import vol­umes, but that may be due to high prices at ori­gin last year,” he said. Retail vol­umes, how­ever, are sta­ble it seems. The big­ger rea­son for the growth of the mar­ket over the last few years was a 5‑year mar­ket­ing cam­paign by EU and ASOLIVA to pro­mote olive oil in India. This cam­paign ended over a year ago. Since then the mar­ket has not grown much and the prices haven’t helped either.”

Despite this slow­ing down of the con­sumer olive oil mar­ket and con­tin­u­ally climb­ing prices, Upadhyay remains opti­mistic and sees the poten­tial for fur­ther growth. The Indian econ­omy and con­sumer story con­tinue to be strong. Major reg­u­la­tory changes such as the GST (Goods and Services Tax) are also done with, so the future looks great for FMCG (fast-mov­ing con­sumer goods) growth. With that, the stage is also set for growth in the olive oil story in India.”

With some price cor­rec­tion at the ori­gin and another mar­ket­ing effort by EU and ASOLIVA, we feel the Indian olive oil mar­ket will con­tinue to grow at over 30 per­cent a year in vol­ume terms,” Upadhyay said.


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