Import duty cut on sunflower oil has a significant Russian backdrop

An increasingly import-dependent domestic edible oil market may add further complexity to New Delhi's ties with Moscow and Washington

Last week, in a largely expected move ahead of the festival season, the central government cut import duties on major edible oils in both crude and refined forms, including the widely imported palm, soybean and sunflower oils. The duty on palm and soybean oil was cut by a uniform 5.5 per cent, while sunflower oil saw a steeper reduction of almost 11 per cent for both crude and refined forms.

 

Sunflower oil, or sunoil, is India’s third-largest imported edible oil after palm and soybean oil. India imports around 2.5-3.3 million tonnes (mt) of sunflower oil annually. Palm and soybean oil are sourced largely from Indonesia, Malaysia, Argentina and Brazil, while sunflower oil comes primarily from Russia and Ukraine.

 

The landed price of crude sunflower oil posted the steepest increase, rising 18.4 per cent to an average of $1,496 a tonne (CIF, or cost, insurance and freight) in August 2026, from around $1,264 a tonne in the year ended August 2025. Crude palm and soybean oil prices rose by around 9.4 per cent and 7.9 per cent, respectively.

 

“As the price increase in sunflower oil was the highest among the three major edible oils consumed in India, it was natural that it would see the steepest decline in Customs duties to bring down its prices ahead of festivals,” a senior industry official said.

 

Sudhakar Desai, president of the Indian Vegetable Oil Producers’ Association (IVPA), said in a statement that the sunflower oil duty cut was steeper, making it more affordable, particularly in South India, a major consuming region. 

 

Some traders said the steep cut in sunflower oil duty is also consistent with India’s long-term strategic partnership with Russia. India’s imports of fertilisers and agricultural commodities from Russia have remained steady in recent years. Russia, along with Canada, is also among India’s top suppliers of yellow peas, and the two countries are negotiating a trade deal that is expected to be finalised during Prime Minister Narendra Modi’s likely visit to Ottawa in mid-December. In April, India extended duty-free imports of yellow peas by a year.

 

Amid US and Western pressure on India over its ties with Russia, former diplomat M K Bhadrakumar said India “should first and foremost and almost exclusively look at trade relations in terms of our economic situation and our national priorities, and particularly agriculture, which is central to our political economy.”

 

“It’s been a disappointing performance (by the Indian government) in the past, but it was also since the imperative need was not there as trade was flowing and commodities were available all over the world. But I have no doubt in my mind that the government is finally moving on these lines,” Bhadrakumar said.

 

The former diplomat, who served in Moscow and other world capitals, said India needs to show the spine in the face of US “prescriptive” policies on where New Delhi should or shouldn’t import from, particularly amid the threat of fresh sanctions on India.

 

India needs to convey to Washington the imperatives of its economic situation, which also have political overtones amid crucial elections, including the Uttar Pradesh Assembly polls, around the corner, he said.

 

“We should diversify and import weighing the factors of advantage both in terms of availability and prices. Russia has been a friendly country, and our strategic interest with Russia, despite the American and the Western pressure, will hopefully continue,” Bhadrakumar said, adding that India’s commodity imports are no less strategic than oil and that the government’s move is the correct one.

 

In a report published September 16, Russian news agency Interfax quoted an Indian Ministry of Commerce and Industry publication as saying Russia earned $1.17 billion from sunflower oil exports to India in January-July 2026, up 34.7 per cent from $868.8 million a year earlier. Export revenue more than doubled from $54.1 million in June to $120.2 million in July, the report said.

 

In volume terms, shipments rose to 859,000 tonnes in the first seven months of the year, from 730,400 tonnes a year earlier. July exports totalled 85,600 tonnes, versus 45,100 tonnes a year earlier.

 

At a meeting with External Affairs Minister S Jaishankar in Moscow in August, Russian President Vladimir Putin said Russia was increasing fertiliser supplies to India’s agricultural sector and was prepared to continue doing so. Jaishankar was in Moscow on August 23-24 to co-chair, with Russian First Deputy Prime Minister Denis Manturov, the 27th session of the India-Russia Inter-governmental Commission on trade, economic, scientific, technological and cultural cooperation. Putin subsequently visited India for the Brics Summit on September 12-13. While Modi’s visit to Russia for the India-Russia Annual Summit is in the works, the two leaders could also meet on the sidelines of the G20 Summit in Florida, US, after Trump invited Putin to attend.

 

During Putin’s visit to New Delhi for the annual India-Russia Summit in December 2025, the two sides welcomed “steps to ensure long-term supply of fertilisers to India and discussed the potential establishment of joint ventures in this area.” India is also negotiating a free-trade pact with the Russia-led Eurasian Economic Union (EAEU).

 

Addressing the United Nations General Assembly on Saturday, Russian Foreign Minister Sergey Lavrov said Moscow backs India’s candidature for a permanent seat on the UN Security Council. Lavrov added that through its foreign policy, “Russia is trying to fix the situation in the world, working together with its allies and strategic partners: The Brics, the Shanghai Cooperation Organisation (SCO), and the EAEU.”

 

Traders said Russia is the world’s largest producer of sunflower oil. Its domestic production, according to some trade journals, is expected to hit a record high of almost 20 mt in the 2026-27 crop season beginning October 2026, about 3-4 mt above estimated 2025-26 output.

 

In neighbouring Ukraine, the world’s second-largest sunflower producer, domestic production in 2026-27 is estimated at close to 11 mt, again about 2-3 mt above the previous season.

 

“Both major countries together will see a production jump of around 5-7 mt of sunflower seed in the coming season and assuming that sunflower seed contains 40 per cent oil, this means a significant extra supply of sunflower oil in the world markets and India being the world’s largest consumer of edible oil is always a market to look forward to,” another official explained.

 

Data shows India imported close to 1.22 mt of sunflower oil from Russia in the first 10 mon- ths of the 2025-26 edible oil year, November to August, around 14 per cent lower than in the same period a year earlier. Overall, India imported close to 2.48 mt of sunflower oil from global suppliers during the period.

 

While imports from Russia fell in volume terms, India made up the shortfall elsewhere to meet domestic demand, sourcing more from Argentina and Europe. Argentina is traditionally one of India’s soybean oil suppliers.

 

India’s domestic sunflower seed production has fallen from around 1.2 mt a year a few years ago to less than 0.4 mt currently, yielding barely 100,000-150,000 tonnes of sunflower oil. That is insufficient to meet rising domestic demand, increasing reliance on imports.

 

On September 22, Interfax reported that officials from Russian Agroexport, the federal agency promoting agricultural exports, met the leadership of the Indian Pulses and Grains Association (IPGA) in Moscow.

 

IPGA head Bimal Kothari said India is the world’s biggest importer of legumes, with estimated annual demand of 32 mt, of which around 6 mt is imported. “According to forecasts by government agencies, consumption will amount to 38-40 mt by 2030. That means that another 8 mt of imports will be necessary over the next four to five year,” Kothari said.

 

According to a press statement, Kothari said India was interested in forming long-term trade relations with foreign suppliers such as Russia.

 

Agroexport head Ilya Ilyushin said Russia sees further potential to increase these exports to India.

 

Ksenia Bolomatova, head of the Russian Grain Association, said Russia exported 185,000 tonnes of legumes to India in 2026. “There is significant potential for increasing export volumes. Russian exporters are interested in expanding cooperation with partners from India,” she added.