ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Burgeoning Edible Oil Imports and Price Shock(s)

A Time for Course Correction

The ever-increasing import bill of edible oil has become a chronic problem for India with edible oil being the third largest among imported goods in India, next only to crude oil and gold. There are structural issues in production, productivity, and trade of edible oils. These energy-rich crops are grown in energy-starved conditions where more than 70% of the area under cultivation is rain-fed and often cultivated with low-quality seeds in a fragmented landholding and outdated agri-management practices. It further studies the trade liberalisation measures of a liberal trade policy regime, lower import duties, duty-exemptions under free trade agreements, and changes that India has witnessed in consumption as well as retail of edible oil.


Oilseed crops, which produce vegetable edible oil, occupy a significant place in the Indian agricultural economy, as it is one of the main components of human food consumption. The increased consumption of vegetable edible oil can be attributed to the transformation towards the westernised diet in developing countries (Popkin 2003). Growing population, urbanisation, increased disposable income, brand awareness and preferences, health consciousness, flavour/taste-texture-colour of edible oil, family size, low oil prices, disincentive pricing, harvest and post-harvest losses, inefficiency of oil extracting plants, etc, affect the purchase and consumption of edible oil (Chaudhry et al 1998). The quality, packaging and prices, etc, also play a role in consumers purchasing behaviour (Ali et al 2013). Assuming the per capita consumption of more than 22 kg per person per annum, Indias total vegetable oil requirement has been estimated to be 33.20 million tonnes for 2022. It is anticipated that 13.69 million tonnes of vegetable oil will be produced from 45.64 million tonnes of oilseeds in 2022. The vast gap between demand and supply of edible oils over the years has forced on India a huge import bill of edible oils causing a considerable drain of foreign exchange.

Nearly 1315 million tonnes (more than half) of edible oil is being imported annually to cater to the countrys annual consumption demand of about 2325 million tonnes. The majority of these imports is palm oil, which accounts for 60% or about 79 million tonnes, with annual variations depending on domestic production, consumption and required deficit to be filled. Subsequent to the liberalisation of the edible oil sector in India in 1994, there was a sharp increase in the consumption of imported oil. Palm oil, not very popular in traditional Indian cooking and mainly imported, also saw a rise in consumption from just under 500 tonnes in 1994 to approximately 10 million tonnes in 2016 (USDA 2016), nearly 40% of the total consumption. Resultantly, India is the largest importer and second largest consumer of palm oil in the world.

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here


To gain instant access to this article (download).

INR 59

(Readers in India)

$ 6

(Readers outside India)

Published On : 17th Jan, 2024

Support Us

Your Support will ensure EPW’s financial viability and sustainability.

The EPW produces independent and public-spirited scholarship and analyses of contemporary affairs every week. EPW is one of the few publications that keep alive the spirit of intellectual inquiry in the Indian media.

Often described as a publication with a “social conscience,” EPW has never shied away from taking strong editorial positions. Our publication is free from political pressure, or commercial interests. Our editorial independence is our pride.

We rely on your support to continue the endeavour of highlighting the challenges faced by the disadvantaged, writings from the margins, and scholarship on the most pertinent issues that concern contemporary Indian society.

Every contribution is valuable for our future.