India Steps Up Palm Oil Buying as Tax Cut Spurs Restocking

India increases palm oil purchases after an import duty cut, with refiners restocking ahead of Diwali and the wedding season as palm oil becomes more competitive.

India is stepping up palm oil purchases after the government reduced import duties on edible oils, prompting refiners to replenish inventories ahead of the festive and wedding seasons. More than 200,000 tonnes of crude palm oil have been purchased over the past week, according to Aashish Acharya, Vice President at Patanjali Foods.

The increased buying follows the government’s decision last week to halve the levy on imports of crude palm and soybean oils to 5%. The broader reduction in edible oil import taxes is aimed at containing food costs. India imports around 60% of the vegetable oil it consumes, leaving domestic prices exposed to changes in international markets.

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Inventories held by distributors and other downstream buyers have declined, increasing the need for fresh supplies before Diwali and the wedding season that follows. India typically imports between 500,000 and 650,000 tonnes of palm oil each month, but purchases could rise to as much as 750,000 tonnes a month during periods of peak demand if prices fall further, Acharya said.

The festival season, which begins in September and continues through Diwali in November, generally increases demand for cooking oil as households, restaurants and food businesses prepare fried foods, sweets and other festive products.

Bookings have also strengthened following the duty reduction, with buyers securing supplies for the coming months. Traders said palm oil has attracted greater interest than competing oils, partly because of uncertainty surrounding sunflower and soybean oil supplies from the Black Sea region.

The rise in Indian demand comes as palm oil supplies in major producing countries Indonesia and Malaysia remain ample. Malaysian inventories have reached their highest level of 2026, while robust production and weaker exports have raised concerns about further stock accumulation.

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Global palm oil prices have also weakened from their August peak. Benchmark Malaysian palm oil futures fell for a fifth consecutive session on October 1, reaching an intraday low of 4,528 ringgit per tonne, the lowest level since July 14.

The combination of lower import duties, depleted domestic inventories and seasonal demand is encouraging Indian refiners to increase purchases. Continued restocking could also affect global palm oil markets by absorbing part of the surplus available from major producing countries.