NITI Aayog’s 2024 report outlines a strategic plan to boost India’s self-reliance in edible oils by expanding palm oil cultivation on wastelands. With over 8.6 million hectares identified for potential growth, this initiative aims to significantly reduce import dependence, increase domestic production, and enhance India’s edible oil security.
Palm oil is a vital crop for India’s edible oil industry due to its high yield and efficient land use. The Indian Council of Agricultural Research (ICAR) and its Indian Institute of Oil Palm Research (IIOPR) have identified significant potential for palm oil cultivation in 284 districts across India.
According to NITI Aayog report titled ‘Pathways and Strategy for Accelerating Growth in Edible Oil towards Goal of Atmanirbharta (2024)’, around 2.43 million hectares (Mha) of additional land is suitable for oil palm cultivation, which could boost edible oil production by 9.7 million tonnes (MT). Furthermore, 6.18 Mha of highly suitable wasteland has been identified, two-thirds of which could be used for palm oil cultivation. Utilizing this wasteland would be a major step towards closing India’s edible oil demand-supply gap.
For this expansion to succeed, the report said, India needs to prioritize the use of wastelands for palm oil cultivation. Strategic partnerships between Farmer Producer Organizations (FPOs), Farmer Producer Companies (FPCs), and Self-Help Groups (SHGs) will play a crucial role. These collaborations, through long-term contracts, can help maximize the potential of underutilized land.
It is important to note that from 2004-05 to 2020-21, India’s oil palm cultivation area increased from 44,788 hectares to 370,028 hectares. Andhra Pradesh saw the most significant growth, rising from 27,514 hectares to 184,640 hectares. Other notable expansions occurred in Karnataka, Tamil Nadu, Mizoram, Odisha, and Telangana.
State-wise cultivated area under oil palm cultivation in India
Source: Ministry of Agriculture and Farmers’ Welfare
Globally, palm oil is one of the most traded agricultural commodities, with 41% of global vegetable oil production being traded internationally. Indonesia and Malaysia dominate the market, together accounting for nearly 60% of global palm oil exports. These countries export over 70% of their production, making them key influencers of global prices and supply. India’s reliance on palm oil imports from these nations makes it vulnerable to price fluctuations and supply chain disruptions, underscoring the importance of boosting domestic production.
Despite strengths in other oilseed sectors, India faces major challenges in becoming self-sufficient in edible oils. It is currently the largest importer of vegetable oils globally, followed by China and the USA.
Although India has made progress in improving self-sufficiency, with its import dependency decreasing from 63.2% in 2015-16 to 54.9% in 2021-22, consumption continues to outpace domestic production. India’s edible oil imports have grown from 1.47 MT in 1986-87 to an estimated 16.5 MT in 2022-23. Palm oil dominates these imports making up 59%, followed by soybean oil (23%) and sunflower oil (16%). India consumed an estimated over 23 million tonnes of vegetable oils in FY 2023.
To manage rising imports and stabilize cooking oil prices, the Indian government has implemented several short-term measures. These include reducing basic import duties on crude palm, soybean, and sunflower oils to zero, while also lowering the agricultural cess. In December 2021, the import duty on refined palm oil was reduced from 17.5% to 12.5%, and similar cuts were made for refined sunflower and soybean oil in June 2023. These temporary measures, extended until March 2025, help manage import costs and control consumer prices but do not offer long-term solutions.
India’s reliance on palm oil imports from Indonesia and Malaysia leaves it vulnerable to external factors like global price volatility and supply chain disruptions. As the largest importer of palm oil, India is heavily influenced by the production and export policies of these countries, which control a significant portion of global supply. This dependence highlights the need for India to focus on domestic production to mitigate these risks.
For India to achieve long-term self-sufficiency in edible oils, a comprehensive strategy focusing on increasing domestic production is essential. This includes expanding palm oil cultivation on suitable wastelands, improving agricultural techniques, and fostering partnerships between stakeholders like FPOs, FPCs, and SHGs.
India’s oil palm (OP) area coverage has increased to around 4.5 lakh ha ( approx.) until FY 23-24, leading to crude palm oil (CPO) production of nearly 4.0 lakh tonnes during FY23-24. By leveraging wastelands for palm oil cultivation, India could substantially boost its production capacity and reduce its dependence on imports.
The horizontal expansion of oil palm cultivation is crucial for India’s future edible oil security. ICAR-Indian Institute Of Oil Palm Research (ICAR-IIOPR) estimates that using 2.43 Mha of suitable land could increase production by 9.7 MT, while utilizing 6.18 Mha of wasteland could add another 24.7 MT, closing the demand-supply gap. These measures, according to the report, could lead to a total increase of 34.4 MT in palm oil production, representing a significant step toward reducing India’s reliance on imports and achieving self-sufficiency.
Palm oil’s high yield and efficient land use would make it a strategic crop for India’s edible oil industry. With vast untapped potential for cultivation, especially on suitable wastelands, India has a significant opportunity to boost domestic production and reduce its reliance on imports.
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