IMPORT OF EDIBLE OIL IN

INDIA

Ashish Chhajer
PGDM5/1812
Abstract
The edible oil and oilseeds sector in India face many challenges in the new environment
of liberalized trade. Government intervention is faced with the task of balancing the
interests of different stakeholders in the oilseed complex. Providing benefits to some may
be at the cost of others. This study analysis the status of Indian edible oil industry and
consumption pattern of various edible oil in various regions.

Introduction
During the first five months of the oil year 2018-19, edible oil imports increased by 3.9%
to 6 million tonnes compared to the corresponding period a year ago. This growth was
primarily on account of 24.7% increase in imports of refined palm oil that stood at 0.96
million tonnes during the period while the import of crude palm oil on the other hand
declined by 4.1% to 2.9 million tonnes.

The main reason for the rise in imports of refined palm oil was the cut in import duty of
refined palm oil from Malaysia and Indonesia. With effect from 1st January 2019, the
import duty on refined palm oil from Malaysia and Indonesia was reduced to 45% and
50%, respectively, from 54% earlier. Besides, the import duty on crude palm oil from
Malaysia and Indonesia was also decreased to 40% from 44% earlier. This, in turn, reduced
the duty difference between crude and refined palm oil from Malaysia to 5% from 10%
earlier while the duty difference between crude and refined palm oil imported from
Indonesia was retained at 10%.

The reduction in duty difference for palm oil imported from Malaysia increased the share
of edible oils imported from Malaysia compared to Indonesia. Resultantly, the share of
edible oil imports from Malaysia increased to 19.1% during November 2018-March 2019
compared to its share of 13.8% in the same period last year while the share of edible oil
imports from Indonesia decreased to 40.9% from 45.4% earlier.

Edible Oil estimates for India

(Unit: Million Tonnes)
Production, Stocks, Trade and Availability of Edible Oils
2018-
2017-18 Feb,2019 Source
19*
10.52 10.06 Production 10.06 DVVOF
14.85 14.98 Imports 4.90** DOC
25.37 25.04 Availability 14.96
0.63 0.65 Export and Industrial use 0.69 DVVOF
Total Available for domestic
24.74 24.39 14.27
consumption
Source: Directorate of Vanaspati, Vegetable oil and Fats (DVVOF) and Department of Commerce (DOC)

*For 2017-18 estimates, Production, Export Industrial use is estimates from DVVOF and Import is 3
years average from DGCI&S, Kolkata.
**Figure of import is for the period Nov-Feb, 2018-19.

1
Availability: Domestic production plus Imports; Total Availability for Domestic Consumption:
Availability minus export and Industrial use.

Production Trend of Domestic Oilseed

Source: Directorate of Economics and Statistics

• India’s Soybean production has increased in the last 10 years at CAGR of 1 percent.
• Groundnut production is estimated to be 8.94 Million Tonnes in 2017-18 as compared to 7.46
Million Tonnes in 2016-17 showing a growth of around 20%.

Production Trend of Domestic Edible Oils

Source: Directorate of Vanaspati, Vegetable oil and Fats (DVVOF)

2
 • Soybean oil production has increased in the last 10 years at CAGR of 1.48 percent.
• Rapeseed oil production increased is estimated to be 2.33 Million MT in2017-18.

Global & Domestic Production, Exporters and Importers of Major edible oil

Global & Domestic Production, Exporters and Importers of Major edible oil
Global India's Major Exporters/ Importers
Edible oil
production production (2017-18)
Groundnut Exporters: Argentina, Brazil, Senegal
5.57 0.99
Oil Importers: China, Italy, USA
Exporters: Canada, Germany, Czech
Mustard Oil 27.96 2.13 Republic
Importers: USA, China, Netherland
Sunflower Exporters: Ukraine, Russia, Argentina
19.45 0.1
Oil Importers: India, China, Netherlands
Exporters: Argentina, Brazil, USA
Soybean Oil 56.97 1.62
Importers: India, Bangladesh, Algeria
Exporters: Indonesia, Malaysia, Netherland
Palm Oil 73.49 0.2
Importers: India, China, Pakistan
Source: USDA, DVVOF, Comtrade

• China is expected to be the top producer followed by India and Burma in 2018-19.
• India’s share in global production of Groundnut Oil in 2018-19may be around 18 percent.
• European Union (EU) is expected to be the top producer followed by China and Canada in 2018-
19. India may be the fourth largest producer.
• India’s share in global production of mustard oil in 2018-19 may be around 8 percent.
• Ukraine is expected to be the largest producer followed by Russia and EU in 2018-19.
• India’s share in global production of sunflower oil in 2018-19 may be around 5.0 percent.
• China, United States, Argentina and Brazil are expected to be the key producers of Soybean oil
in 2018-19.
• India’s share in global production of Soybean Oil in 2018-19may be around 3 percent.
• Indonesia and Malaysia are major Palm oil producers in the world.

3
 India’s import of major edible
(Qty in Lakh Tonnes)

Source: Department of Commerce

• India imports substantial amount of edible oils for its domestic consumption. Among all edible
oils importation into India, Palm oil import share is around 60 percent.

India’s top import sources of Palm, Soya and Sunflower Oils

Edible Oils Import Source

Soybean Oil Argentina and Brazil
Palm Oil Indonesia and Malaysia
Sunflower Oil Ukraine and Argentina
Source: Department of Commerce

Conclusion
• It becomes an urgent need to increase or rectify the duty difference given the fact that the
international palm oil prices are expected to remain weak on account of their estimated higher
supplies which, in turn, can increase the supply of cheap edible oil imports in India.
• The imports of edible oils by India with the current duty structure are expected to increase by
around 3% to 14.9 million tonnes during the year 2018-19 with availability of cheap edible oils
in the global market and also on the back of low base effect. Edible oil imports had declined by
3.9% y-o-y to 14.5 million tonnes during the last oil year 2017-18 mainly due to consecutive
import duty hike undertaken by the government during the year.
• The higher imports and weak international prices are likely to keep the domestic prices of edible
oils under pressure in the country, even though the import duty on variety of edible oils is as high
as 35%-50%.