Biofuel boom forces India to rethink its vegetable oils strategy

The rapid growth in global biofuel demand is reshaping the vegetable oils market, prompting India to intensify efforts to reduce its dependence on imports. Bhavna Shah, Vice President of the Indian Vegetable Oil Producers’ Association (IVPA), said that the combination of climate risks, geopolitical instability, and expanding biofuel programs in producing countries is creating new challenges for the world’s largest vegetable oil importer.

Domestic production currently covers only 40–45% of India’s demand, while the remaining 55–60% is met through imports. Even a modest increase in consumption has a significant impact on the market: every additional kilogram of vegetable oil consumed per capita translates into the need to import roughly 1.4 mln tons of additional supplies.

According to Shah, the greatest threat comes not from any single factor but from the convergence of multiple risks. Volatile crude oil prices are raising transportation and processing costs, adverse weather is reducing oilseed harvests, and expanding biodiesel programs in Indonesia, Malaysia, the United States and other countries are diverting increasing volumes of vegetable oils from food markets to the energy sector.

She argued that India should focus less on expanding planted area and more on improving oilseed productivity. Key priorities include better seed technology, irrigation, mechanization, logistics and processing infrastructure, as well as stable government policies that encourage long-term investment in the sector.

Shah also noted that India’s role in the global vegetable oils market is changing rapidly. While the country was once seen primarily as the world’s largest buyer responding to global prices, its import policy, tariff decisions, and purchasing activity are now increasingly influencing international trade flows and global price formation.

At the same time, IVPA is urging the government to carefully balance biofuel development with food security. The association believes that biofuel production should rely primarily on used cooking oil, agricultural residues, and second-generation biofuels, while limiting the use of edible vegetable oils to avoid further food price inflation and rising import dependence.

Tags: imports, edible oils, biofuel, India