The Indian Edible Oil Industry is close to over 2 Lakh Crore Industry as the Consumptions rate of Oily foods by Indians is Very High. Oils are used almost in any and every Indian recipe and Indians for that matter love the Deep-fried foods as part of their natural diet. A normal Indian’s per capita consumption is averaged at 17.5Kgs per year and with a population of 1.36 billion, India is poised to consume 23 Million Metric Tonnes (MMT). Now the question is how does the country acquire so much of edible oils that are in demand.
Supply and Demand Problem
Reports say that in India the Oil Seed Cultivation is around 25 Million Hectares with an around average yield of One TONNE per hectare. This means the average production of Oil Seeds is around 25Million tonnes. This after oil extraction yields around 7-8 tonnes of Edible Oil (around 30% of Oils Seed Yield). This means the country still needs an average of 15 Million Tonnes of Oil for Consumption. Hence even today over 70% of Edible oils are imported from countries such as Indonesia, Malaysia, Argentina, Ukraine, Russia, UAE, etc.,
However, the demand does not stop here, current projections from experts rate that our consumption is increasing and is expected to touch 20kgs by 2025. This is due to Urbanization and Adaptation to Junk foods and Eating packed/hotel foods almost daily the average consumption of an Indian. Hence assuming our population grows at 1.5% the demand for 2025 is estimated at 1.46 Billion which means around 30MMT of edible oils will be required in the country. This means the Oil Seed Production to handle this demand should grow to over 100MMT.
Edible Oil produced and imported
India uses a variety of oils that are used for cooking and other uses. They are Rape Seed & Mustard, Soybean, Ground Nut, Sunflower, Sesame, Niger Seed, Safflower, Castor, Linseed, Coconut, Cotton Seed, Palm, Rice Bran, SEO, Tree and Forest Origin Oils.
However, not all of them are produced in India. Palm oil is the most used oil in India due to its cost-effective offering. While the cultivation of Palm oil in India is very minimal, It is mostly imported from Malaysia and Indonesia. Primarily used in the HORECA segment, Palm oil has been in the news for all the wrong reasons especially from the Environmental Activists. Similarly, Soybean and Sunflower oils are also imported from countries like Argentina, Russia, and Ukraine though they are cultivated in India.
The following are few latest statistics for India
India’s Production for 2019-20
|Edible Oil||Million Metric Tonnes|
|Ground nut oil||1.13|
India’s Imports for 2019-20
|Edible Oil||Million Metric Tonnes|
What does India need to do to increase the production of Edible Oils
In a recent programme conducted by the Solvents Extractor’s Association of India, it’s Executive Director Dr. B V Mehta laid out a 10 points agenda for the government to implement such that the Indian dependency on edible oil imports is reduced and become self-sufficient. These action points are
- Announce the National Mission on Edible Oils with Rs. 5,000 crores allocation per annum
- Shift acreage from Wheat and Rice Cycle to Soya / Sunflower / Maize and Mustard growing in Punjab and Haryana region by providing incentives to farmers
- Declare Oil Palm as Plantation Crop
- Exempt land suitable for oil palm from land ceiling act
- Explore the full potential of non-traditional sources
- Introduction of GM Crop for higher productivity on lines of Cotton
- Raise the import duty on edible oils to translate remunerative price to farmers
- Import duty be linked to MSP and be proportionately raised as and when MSP is hiked
- Encourage ‘Make In India’ and ‘Atmanirbhar Bharat’ by restricting the import of refined oils and blended oils
- Tax benefit for Oilseed Extension program