SOWING SELF-SUFFICIENCY

India is actively cultivating a strategy to stimulate domestic demand, promoting self-reliance in the production of edible oils

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Like in the case of petroleum, where 85% to 90% of India's requirements are imported, the country's self-sufficiency in edible oils is dipping over the years. In the recently concluded oil year (November-October) 2022-23, India's imports of edible oils reached an all-time high of 16.47 million tonnes from around 14 million tonnes in the previous year.

Around 60% of the country's domestic demand for edible oils is met through imports. In the year gone by, India imported around 9.8 million tonnes of palm oil from Indonesia, Malaysia and Thailand; 3.7 million tonnes of soybean oil from Argentina and Brazil; and about 3 million tonnes of sunflower oil from Russia, Ukraine and Argentina.

To set the context, India has resorted to imports since 1990. This was done to bridge the demand-supply gap. Today, India is one of the largest consumers of vegetable oil in the world. India is also the largest importer of palm, soybean and sunflower oil in the world. However, there exists a gap between domestic supply and demand.

From a 20-year perspective, the import volume of edible oil has increased by around 3 times while the cost of import has gone up nearly 17 times. This has led to a massive outgo of foreign exchange. According to trade body The Solvent Extractors' Association of India, import volumes have surged from just 5 million tonnes in 2001 to an all-time high of 16.47 million tonnes currently. In the same period, India's import bill has gone up from ₹7,000 crores to around ₹1.4 lakh crores in 2022-23.

India's US $35 billion edible oil industry has reached a stage where imports have started to pinch the government (through the loss of foreign exchange reserve), the consumers (through price volatility) and the domestic vegetable oil refining sector (through the loss of business).