There has been a sharp increase in edible oil exports from India, which rose by 54% in the financial year 2019-20 as compared to the previous year. There was a definite increment in shipment of groundnut oil especially to China.
During the financial year 2019-20, India exported 80,765 tons of various edible oils which was valued at INR 955.51 crore. In 2018-19, these figures were 52,490 tons valued at INR 627.11 crores.
Edible Oil Exports
India’s role as an edible oil exporter is defined by the Export Import Policy on Edible oils of the Department of Food & Public Distribution, Government of India. There is a gap between demand and supply and the country has to depend on imports to cater to the same.
The government exercises its say on import and export by reviewing the import duty structure on edible oils when it feels that there is a need to step in.
This is done to safeguard the interests of growers of oilseeds, processors, and consumers at any given situation. To ensure that edible oil is available in the country, export of the commodity was banned with effect from 17.03.2008, which has been extended time and again.
Exports of rice bran oil in bulk was permitted with effect from 06.02.2015. Export of groundnut oil, sesame oil, soyabean oil and maize (corn) oil has been allowed with effect from 27.03.2017. Export of all edible oils except mustard oil was made free without quantitative ceiling; pack size etc., with effect from 06.04.2018. Mustard oil is allowed in packages of up to 5 kg with a minimum export price of USD 900 per MT.
Production of oilseeds in India
The country is accountable for around 6-7 percent of oilseeds production globally. India is the fourth largest edible oil economy in the world after USA, China and Brazil. The country has around 15,000 oil mills, 711 solvent extraction units, 264 plants of Vanaspati, 1000 refineries, providing employment to around one million people.
The total market size is around INR 600 billion and import/export trade is valued at INR 130 billion. India has to import 40% of its consumption requirements as it is deficit in oils.
India’s edible oil industry is expected to grow at a compound annual growth rate of 7% in the period 2021-2026. The drivers fueling this growth are increasing disposable income, rising consumer awareness about healthy lifestyles, strong marketing activities by leading brands, and a shift in consumption patterns towards branded oils.
The increasing penetration of the processed food sector is also having a positive impact on the edible oils industry in the country. In financial year 2019, soya oil accounted for more than one third of the total market share. The other leading types used that year were mustard oi, palm oil, and sunflower oil.
Edible Oil Imports
The country has a requirement of 25 million tons of vegetable oils, of which only 10.5 million tons is cultivated domestically. This makes the nation one of the world’s leading importers of vegetable oil. This trend is expected to continue in the future with a steady rise in the per capita consumption of oil.
India is a third largest edible oil importer in the world, with the country importing half of its edible oil requirement. This commodity is the third biggest import item after crude oil and gold. The main oil imported in the country is palm oil. Soyabean oil imports have also increased significantly in recent time.
The consumption of vegetable oil has increased in India fueled by a rise in household income and consumer demand. The country procures soya oil from Argentina and Brazil and palm oil from Malaysia and Indonesia. As of 2021, the country is importing 60% of its vegetable oil needs from Malaysia and Indonesia.
The country’s vegetable oil economy is fourth largest globally, after the US, China, and Brazil. India is a leading producer of oilseeds. However, the per capital oil production in India is only 10.6kg/annum. The corresponding figures is 12.5 kg/annum for China, 20.8 kg/annum in Japan, 21.3 kg/annum in Brazil and 48.0 kg/annum in USA.
The country has a promising growth in demand for vegetable oils due to the impact of the factors listed below.
- Consistent GDP growth rate
- Emergence of the middleclass searching for the best edible oil online
- Change in food habits
- Governments support with schemes such as National Rural Employment Guarantee Act increasing income
- Supply of edible oils by Government at subsidized rates under PDS
Types of oils used in the country
A wide spectrum of agro climatic zones in the country translates into different types of oilseeds crops being cultivated. The traditionally grown oilseeds in the country are groundnut, mustard/rapeseed, sesame, safflower, linseed, nigerseed /castorseed. The other types that have assumed significance in recent years are soyabean and sunflower.
Groundnut, soyabean, and mustard together account for about 85 percent of the country’s oilseeds production. Rice bran oil and cottonseed oil are significant among non-conventional oils in India. Other sources include oilseeds of tree and forest origin.
The consumption of olive oil is rising 25% every year, as more and more Indian consumers are becoming aware of the health benefits of cooking with this medium.
Dependence on other countries for edible oil can put a huge burden on exchequer and make the market volatile. In such instances, international price changes due to lower production in a particular country would be impacting Indian consumers.
India has the inherent potential to augment the domestic production of oilseeds. This in turn could make the country self-sufficient in vegetable oils. Government initiatives such as the Technology Mission on Oilseeds can augment the area devoted to oilseeds cultivation and meet the domestic demand as well as may create surplus to export.
India can opt for improved agricultural technologies to enhance production. Other steps to deal with the supply constraints are the use of high quality seeds, use of fallow land to grow oilseeds such as safflower and mustard crops, and shifting the focus to alternative options such as rice bran oil which is known to reduce the risk of heart attack and type 2 diabetes.