Feb 07, 2024

Drowning in imports: Can India find a way out of its edible oil deficit?

Vaibhav Singh, PGDM (BM) 2023-25  

India, one of the largest producers of oilseeds in the world, faces the very counter-intuitive problem of being unable to meet the domestic consumption requirement for edible oils within the country. Rising incomes, urbanisation, westernisation of diets, and shifting health perceptions in the 2000s caused a three-fold increase in per capita consumption of edible oils.1 With only marginal improvements in the production side, the edible oil sufficient India of the 90s became import dependent – 142 lakh tones of edible oil were imported during FY 2021-2022, about 55% of the domestic consumption.2 The major trade partners from whom India imports include Indonesia, Malaysia (palm oil), Argentina, Brazil (soyabean oil), Ukraine, and Russia (sunflower oil).

Need for a shift towards domestic production of edible oil

Recent geopolitical crises like the Russia-Ukraine war, droughts in South America, etc., have disrupted the global supply chain, leading to skyrocketing edible oil prices.3 For emerging countries, the inelastic nature of these imports weakens the currency and ties down the government as it has to take cuts as well to control the food inflation, which has been rampaging in the last few years. All these factors combined make a strong case for India to take steps to become self-sufficient in edible oil production. In India, traditionally, the focus has been on cereal-based crops such as wheat, paddy, etc., to the neglect of oilseed (groundnut, mustard, linseed, castor, etc.) cultivation. With close to 67% of the farmers involved in subsistence farming4, there are very few incentives for them to switch to non-cereal crops such as oilseeds. Adding to these, the lower trade tariffs on imports have also made the domestically-produced oilseeds less lucrative in terms of return.

The changing landscape

However, now that we have our food storage filled to the brim, there needs to be a change in the agriculture pattern to diversify the crops being grown. Given the numerous subsidies and MSPs5 around cereal crops, farmers are reluctant to

produce different crops. However, crops like paddy and wheat are water guzzlers, leading to extreme water scarcity in the concerned regions, as well as the runoffs from fields containing fertilisers and pesticides lead to environmental concerns such as water pollution. In addition to this, stubble burning leads to air pollution (worsening AQI) and various respiratory diseases.6 These factors demonstrate that the present agricultural pattern is unsustainable in the long run which gives a white space for oilseeds to come into the picture.

Given democracy, governments in India have often been overcautious in bringing reforms to the agricultural sector, leading to persistence in the practices. However, with the 2020 Farm bills7, National Food Security Measures – Oilseeds and Oil Palms8, National Mission on Edible Oil9 etc., there have been positive attempts by the present government to enhance oilseed cultivation in India. The NMEO-OP programme aims to increase the cultivation of palm oil by 6.5 lakh hectares in the northeastern states and the Andaman and Nicobar Islands by 2026. The government can take additional steps, such as maintaining the rate of imported edible oils so that there is no cheap oil available in the market. There also needs to be investments in the research and development of disease-resistant and high-yield seeds, as the oilseeds in India are relatively low-yielding compared to other countries.10 The existing processing infrastructure also needs to be improved, as limited processing capacities and outdated technologies lead to delays in converting oilseeds into edible oils.

A robust procurement market can be set up by including oilseeds in the Public Distribution System (PDS), which would enhance the confidence in this sector. Apart from the government, several renowned private players like Adani Wilmar, Marico Ltd, ITC Ltd, and Ruchi Soya Industries Ltd are also playing a pivotal role in ramping up the nation’s edible oil production by actively promoting oil palm cultivation through contract farming initiatives, empowering women farmers to promote oil palm cultivation (Marico’s Project “Shakti”), providing farmers with high yielding varieties and technical expertise, etc.

Looking forward

On the ground level, farmers can try crop rotation on an initial trial basis. For example, relay cropping of mustard can be done post the monsoon harvesting of paddy, as mustard is proven to thrive in moisture-retained soil.11

This can result in the production of 3.5-4 million tons of mustard seeds domestically. To benchmark this number, India imported almost 11 million tons of mustard seeds in 2021-22. It has also been found that groundnut and soyabean oil production is relatively less water-dependent, and has grown well even in water-scarce conditions. This becomes vital because of the unpredictable weather patterns due to global warming that has affected farming adversely across the globe. Innovations in farming techniques such as System of Crop Intensification (SCI)12 have enhanced productivity and reduced the cost of cultivation for farmers in states like Madhya Pradesh and Bihar, which would help in oilseed cultivation.

Imagine a future where India’s fragrant kitchens hum with the aroma of homegrown oils, not imported ones. A future where fields shimmer with oilseed crops, not choked by smoke from stubble burning. The byproducts in the process can be converted into biodiesel by the process of transesterification13, which can be used as an eco-friendly alternative to traditional fuels. This reduces the damage done to the environment by stubble burning and also helps in water conservation. This would help India take giant leaps towards its sustainability goals, and the import-independency in oilseeds would allow greater diversification and control of imports, leading to even faster growth of the already expanding economy.

This is not a distant dream, it is a call to action. The potential is vast, and the benefits are undeniable. Let us join hands – farmers, entrepreneurs, policymakers, and consumers – to nurture this golden opportunity by investing in research, providing fair prices, building robust infrastructure, and embracing sustainable practices. Let us not just cook with oils. Let’s fuel a brighter future with oilseeds. The time for action is now, the rewards are within our reach.

Grow oilseeds, grow India!


1 Welcome to Department of Food and Public Distribution. (n.d.). https://dfpd.gov.in/

2 P. (2023, August 11). India imported 141.93 lakh tonnes edible oil during 2021-22 marketing year: Government. The Economic Times. https://economictimes.indiatimes.com/news/economy/foreign-trade/india-imported-141-93-lakh-tonnes-edible-oil-during-2021-22-marketing-year-government/articleshow/102650417.cmsble-oil-during-2021-22-marketing-year-government/articleshow/102650417.cms

3 Jadhav, B. R. (2022, November 14). Will India be self-reliant in edible oil production by 2030? BusinessLine. https://www.thehindubusinessline.com/data-stories/deep-dive/how-consumption-pattern-is-dictating-growth-in-state-gst-collections/article66131891.ece

4 De Sam Lazaro, F. (2018, May 23). India’s struggling farmers find seeds of hope in heritage crops. PBS NewsHour. https://www.pbs.org/newshour/show/indias-struggling-farmers-find-seeds-of-hope-in-heritage-crops

5 MSP for different crops. (n.d.). https://pib.gov.in/PressReleasePage.aspx?PRID=1795706

6 Das, P. (2023, November 9). Stubble burning major contributor to Delhi’s deteriorating air quality: CAQM | Mint. Mint. https://www.livemint.com/news/india/stubble-burning-major-contributor-to-delhi-s-deteriorating-air-quality-caqm-11699541145631.html

7 Chand. (2020, November). NEW FARM ACTS- UNDERSTANDING THE IMPLICATIONS. In NITI Aayog. https://www.niti.gov.in/sites/default/files/2023-02/NewFarmActs2020.pdf

8 Production of Oilseeds and Edible Oil. (n.d.). https://pib.gov.in/PressReleasePage.aspx?PRID=1842781

9 Cabinet approves implementation of National Mission on Edible Oils – Oil Palm. (n.d.). https://www.pib.gov.in/PressReleasePage.aspx?PRID=1746942

10 Choudhary, D. (2018, March 22). Causes of low production of oilseed in India & further strategy for enhancing the production and productivity. ResearchGate. https://doi.org/10.13140/RG.2.2.33827.55841

11 Improving India’s oilseeds production. (n.d.). https://www.downtoearth.org.in/blog/agriculture/improving-india-s-oilseeds-production-55366

12 Adhikari, P., Araya, H., Aruna, G., Balamatti, A., Banerjee, S., Baskaran, P., Barah, B. C., Behera, D., Berhe, T., Boruah, P., Dhar, S., Edwards, S., Fulford, M., Gujja, B., Ibrahim, H., Kabir, H., Kassam, A., Khadka, R. B., Koma, Y. S., . . . Verma, A. (2017, November 20). System of crop intensification for more productive, resource-conserving, climate-resilient, and sustainable agriculture: experience with diverse crops in varying agroecologies. International Journal of Agricultural Sustainability, 16(1), 1–28. https://doi.org/10.1080/14735903.2017.1402504

13 Transesterification- An Overview. (n.d.). ScienceDirect. https://www.sciencedirect.com/topics/engineering/transesterification#:~:text=Transesterification%20is%20d%20efined%20as%20the%20chemical%20conversion%20process%20of%20triglycerides,low%20cost%20and%20ea%20sy%20availability.

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