India’s Quest For Self-Sufficiency in Edible Oils

WITH EDIBLE OIL IMPORTS COSTING ₹80,000 CRORE IN 2021, AND DEMAND RISING RAPIDLY, INDIA MAKES A SERIOUS BID TO ARREST PRICE SHOCKS. HERE’S HOW...

- JOE C. MATHEW

ON APRIL 28, TWO MONTHS AFTER THE Russia-Ukraine war began, Indonesia banned export of palm oil to contain soaring cooking oil prices. India, the world’s largest importer of palm oil, got into a firefighting mode to prevent shortage of edible oil. When domestic prices shot up, central government had to issue an assurance people that the country had sufficient stock of edible oils. It said it has a stock of 21 lakh metric tonnes (LMT) edible oils, while another 12 LMT is in transit.

The ban, and resulting supply disruptions, was another reminder of India’s vulnerability to fluctuations in international edible oil markets—India imports over 133 lakh tonnes edible oil worth ₹80,000 crore every year, more than half its demand. Edible oil and related products such as vegetable or animal fats is India’s 7th-largest import category. Shortage and resultant price increase can derail India’s fiscal calculations and fuel inflation.

Disruption from Indonesia (Malaysia is the other source of palm oil) was particularly worrisome as palm oil, crude & refined, accounts for roughly 62% of edible oil imports. While soybean oil, which is 22% of India’s edible oil imports, comes from Argentina and Brazil, sunflower oil (15% of edible oil imports) comes from Ukraine and Russia.