India's Strategy to Boost Domestic Oilseed Production and Reduce Edible Oil Imports

India, the world's largest importer of vegetable oils, spent a record US$20.8 billion on edible oil purchases in the fiscal year ending March 2023. The country's reliance on imports is due to stagnant local oilseed production, necessitating the import of over two-thirds of its annual vegetable oil consumption, which is around 23 million metric tons. Palm oil alone accounts for nearly 60% of India's total vegetable oil imports.

Finance Minister Nirmala Sitharaman announced plans to boost domestic oilseed production, including rapeseed, peanuts, sesame, soybean, and sunflower, as part of the interim budget for the fiscal year starting April 1. The strategy aims to achieve self-reliance in oilseeds through initiatives such as developing high-yielding varieties, adopting modern farming techniques, creating market linkages, ensuring purchases, adding value to crops, and providing crop insurance. However, the specific investment required for this initiative was not disclosed.

Despite longstanding efforts to increase local production, India's oilseed output has remained almost stagnant, growing at an annual rate of 2.4% over the last two decades, while demand has surged due to population growth and increasing prosperity. India primarily imports palm oil from Indonesia, Malaysia, and Thailand, and soy oil and sunflower oil from Argentina, Brazil, Russia, and Ukraine. There have been suggestions to raise import duties on edible oils to make local oilseed cultivation more attractive to farmers and to support domestic production.