Despite supplies of edible oil remaining intact, concerns have been rising. For imports of edible oil, India does not use the Strait of Hormuz, the epicentre of global uncertainties.

India imports large quantities of edible oil from Argentina, Brazil, Russia and Ukraine, primarily through the Black Sea route. Most of the imported palm oil comes from Malaysia and Indonesia.

In terms of availability of edible oils, there is no issue.

— Sudhakar Desai, President of the Indian Vegetable Oil Producers’ Association (IVPA), told The Secretariat

But PM's call reveals a broader challenge for policymakers.

India’s annual edible oil consumption is estimated at nearly 27-29 million tonnes. The country, however, continues to import more than half of this despite years of policy effort to boost domestic production. India is the largest importer of edible oil, followed by China and the US. 

“If every family reduced its consumption of cooking oil even slightly, as I have repeatedly urged, by around 10%, it would be a significant act of patriotism. By consuming less oil, people can contribute to the service of the nation. It will benefit both the country and individual health. It will improve the health of the nation’s treasury as well as the health of every member of the family,” PM Modi said during his speech in Hyderabad on May 10.

Framing lower oil consumption not merely as a health concern but also as an economic necessity, Modi linked household consumption patterns directly to India’s foreign exchange burden and food security concerns.

Billions are being spent on edible oil at a time when foreign exchange reserves stand at around $690 billion, according to Reserve Bank of India data for the week ending May 1, a figure that is under strain due to the West Asia conflict.

Rising Consumption

India’s edible oil consumption has increased sharply over the past two decades, reflecting changing dietary patterns and rising demand across both rural and urban India.

Government data shows that per capita edible oil consumption in rural areas increased from 5.76 kg annually in 2004-05 to 10.58 kg in 2022-23. In urban areas, consumption rose from 7.92 kg to 11.78 kg during the same period.

Therein lies a structural problem.

According to Press Information Bureau (PIB) data, India currently meets only around 44% of its edible oil demand through domestic production, with imports accounting for the remaining.

This leaves domestic consumption vulnerable to global commodity volatility, geopolitical disruptions, and supply chain shocks.

According to data from the Directorate General of Commercial Intelligence and Statistics (DGCI&S), India’s edible oil imports rose from 135.4 lakh tonnes in FY21 to an estimated 175.9 lakh tonnes in FY25.

The import bill, meanwhile, surged from nearly $11 billion in FY21 to over $20.8 billion in FY23 before moderating in subsequent years.

The sharp rise in import costs during FY22 and FY23 coincided with major global disruptions, particularly the Russia-Ukraine conflict, which severely affected sunflower oil supplies, and export restrictions imposed by major palm oil-producing countries such as Indonesia. These shocks exposed India’s vulnerability to international edible oil markets and contributed to food inflation pressures domestically.

Although import dependence has been declining - from 63.2% in 2015-16 to 56.25% in 2023-24 - rising consumption levels continue to widen the gap between domestic production and demand.

An Observer Research Foundation report noted that though demand has grown at an average annual rate of 4.3%, oilseed production has expanded at a comparatively modest rate of 2.2%, widening the supply–demand gap and increasing reliance on imports. “This persistent shortfall has heightened India’s exposure to global price volatility and supply disruptions,” the report said. 

The current West Asian crisis has further aggravated the situation.

Production Gap

Domestic production remains around 12 million tonnes, forcing the country to rely heavily on imports to meet demand. Farmers are reluctant to grow oilseeds due to relatively lower profit margins. Production of other key crops such as rice and wheat is considered “safer.”

A major share of India’s edible oil imports consists of palm oil (both crude and refined), which is sourced primarily from Indonesia and Malaysia. Soybean oil imports largely come from Argentina and Brazil, while sunflower oil is mainly imported from Ukraine, Russia, and Argentina.

The government has attempted to address the issue through the National Mission on Edible Oils (NMEO), which focuses on both palm oil cultivation and improving the yields of traditional oilseed crops such as mustard, soybean, and groundnut. Under the mission, the government aims to increase oilseed production from 39 million tonnes to nearly 69.7 million tonnes by 2030-31, while targeting domestic edible oil production sufficient to meet around 72% of projected demand.

The Centre’s recent decision to increase Minimum Support Prices (MSP) for key oilseed crops such as soybean, sunflower, groundnut, and sesamum is also being viewed as part of a broader push to strengthen domestic edible oil production. Higher MSPs are expected to encourage farmers to shift towards oilseed cultivation by offering better price assurance at a time when India continues to face a large demand-supply gap in edible oils.

“In case of edible oils, it can be a strategic call to say that we need to constantly focus on domestic crop increases,” Desai said.

“We also suggested a dynamic, more predictable, more workable dynamic duty slab, which was considered in government circles also, which is basically keeping the duties in a manner that you balance between what the farmer's remuneration should be and what the consumer price that you want,” he added.

Officials have also raised customs duties on crude and refined edible oils in recent years to discourage cheap imports and support domestic producers. However, structural challenges continue to persist, with a significant portion of India’s oilseed cultivation remaining rain-dependent and vulnerable to climate variability and yield instability.

India’s edible oil ecosystem was once closer to self-sufficiency during the “Yellow Revolution” of the 1990s under the Technology Mission on Oilseeds.

However, rising consumption with the increase in average household incomes, changes in trade policies and lower import barriers gradually increased dependence on overseas markets.

Ground Reality

We can control oil consumption in commercial kitchens to some extent, but reducing it drastically is difficult because customer demand ultimately drives production. If more people are ordering fried food, kitchens have to use oil accordingly. What commercial kitchens can realistically do is avoid excessive usage and manage consumption more efficiently. We also receive company guidelines on maintaining and regulating oil usage.

— said the branch manager at KFC in Delhi

The comments reflect the broader challenge policymakers face in attempting to reduce edible oil consumption through behavioural change. While awareness campaigns may encourage moderation at the household level, rising urban consumption patterns and increasing demand for fried and processed foods continue to drive edible oil usage across both homes and commercial kitchens.

Policymakers will now have to balance rising domestic demand, farmer incentives, and consumer affordability while reducing India’s dependence on imported edible oils.

As global commodity markets remain vulnerable to geopolitical disruptions and supply shocks, boosting domestic oilseed production is increasingly being viewed not only as an agricultural priority but also as an economic and food security imperative.