Friday, 12 Sep, 2025
India remains mysteriously and hopelessly dependent on imports to meet demand for edible oil
Seasoned journalist Harsh Damodaran has written an exclusive story in The Indian Express analysing how edible oil prices in international markets have crashed after reaching peaks in June 2022. According to data provided in the story, the Food and Agricultural Organisation sub index (base year 2014-15) for vegetable oils has fallen about 19% from a peak of 251.8 in March, 2022 to 211.8 points by end June, 2022. In absolute terms, crude palm oil prices have crashed from $ 1735 per ton on June 8, 2022 to $ 1175 per ton on July 8, 2022. In the same period, Palmolein oil prices have plummeted from $ 1710 per ton to $ 1160 per ton. Prices of soya bean and sunflower oil too have dropped, but not as significantly. It is against this backdrop that one can understand the decision of the Union Government instructed domestic edible oil producers to reduce prices by at least Rs 10 per litre.
This plus the expectation of the Kharif harvest arriving in the market is what probably prompted the Reserve Bank of India Governor to publicly announce a few days ago that the pressure on inflation will ease in the second half of the current financial year. While prices of all food items have grown over the last 18 months or so, edible oil prices had skyrocketed in India, doubling from an average of about Rs 100 per litre in late 2020 to more than Rs 200 in 2022. For lower middle class and middle class Indians hit badly by Covid pandemic induced stagnant incomes and high inflation, the festive season coming this October should bring some cheer at last. C Voter-India Tracker surveys in recent weeks have shown that Indians are more optimistic about their family finances in the future. If these trends hold, they could once again turn out be right and perhaps more prescient than economic experts.
Yet, amidst this good news, the bad one is that India remains mysteriously and hopelessly dependent on imports to meet demand for edible oil. As the accompanying chart shows, there has been a relentless rise in edible oil imports over the last decade and half. It was 5.40 million tons in 2006-07 and zoomed to 15.17 million tons in 2019-20. It was the Covid pandemic and the insanely high global prices that have led to a decline in imports. But going by past trends, imports will break fresh records in a year or two. It is a mystery why India is not able to domestically produce edible oil (raw material is an agricultural crop oil seeds). Production in agriculture, horticulture, dairy and poultry have grown phenomenally and India is an exporter of all four categories. But when it comes to oil seeds, it is a different story. Experts have many reasons to offer for this. But the common sense explanation is that the Indian farmer doesn’t think it is financially lucrative to grow oil seeds. Not being able to rectify this for decades is a big failure of successive governments in Delhi.
