Experts urge India to make edible oil import duties more flexible

Geopolitical tensions in the Middle East and a weaker-than-expected monsoon season are increasing risks for India’s edible oil market. The country, which must feed a population of more than 1.4 billion, remains heavily dependent on imports of palm, soybean and sunflower oil, while rising global commodity and energy prices are adding to inflationary pressure on the economy.

Analysts say this year’s monsoon could bring the weakest rainfall in eight years, creating additional risks for domestic oilseed production. Against this backdrop, economists have lowered India’s GDP growth forecast from 7.7% to 6.6%. At the same time, the government aims to almost double domestic edible oil production to around 25.5 mln tons by 2031 by expanding oilseed acreage to 33 mln ha and introducing more advanced cultivation technologies.

According to the Observer Research Foundation (ORF), India’s dependence on imported edible oils has risen from 15% in 1995 to 56% today. This leaves the country with limited bargaining power when geopolitical shocks or supply chain disruptions affect global markets. India’s edible oil demand has increased by an average of 4.3% per year, while domestic oilseed production has grown by only 2.2%, widening the gap between supply and demand.

Higher fuel prices are also increasing the cost of fertilizers and other agricultural inputs. Experts warn that unless farmers receive sufficient compensation through government support mechanisms, they may become less interested in long-term oilseed cultivation, potentially undermining India’s strategy to reduce its dependence on imports.

Against this backdrop, ORF has advised India to make its edible oil import duty system more flexible in line with global market conditions. Duties could be raised when international prices fall to protect domestic producers and reduced during global price spikes. Experts also recommend developing dedicated edible oil trading hubs and investing in oilseed cultivation abroad.

Tags: soybean oil, India, palm oil, imports, edible oils, duties, sunflower oil