As India's thirst for edible oil grows, curbing imports seems unworkable

India's edible oil demand continues to rise on the back of population growth and improving incomes, making import dependence difficult to curb unless domestic oilseed production rises sharply

Despite Prime Minister Narendra Modi's calls to reduce domestic edible oil consumption for health reasons — the latest being in the wake of the West Asia crisis — industry experts and others say the appeal might have only limited impact as rising incomes, population growth, and changing consumption patterns will continue to drive demand.

 

Moreover, since edible oil is a so-called essential commodity and an item of mass consumption in India, cutting consumption is easier said than done.

 

Indians currently consume an average of 22-24 kilogrammes of edible oils annually per capita, according to industry reports. That number is a threefold increase over the past two-and-a-half decades from a mere 8.2 kg in 2001. It is also almost twice the Indian Council of Medical Research (ICMR)-recommended limit of 12 kg per annum.

 

India’s annual per capita edible oil consumption also varies significantly across regions and income groups, point out industry sources, which means a one-size-fits-all formula is simply not feasible to implement. Western states such as Gujarat, Maharashtra, Rajasthan, Punjab, and Haryana report the highest consumption levels, ranging between 22 kg and 30 kg per person annually, driven by relatively higher incomes and dietary preferences for oil-rich foods.

 

In contrast, eastern states such as Bihar and Jharkhand, along with parts of the Northeast, record significantly lower consumption of around 10-12 kg per capita annually due to lower purchasing power. Southern states, where food habits traditionally involve lower oil usage, consume around 17-18 kg per person annually, industry estimates suggest.

 

Why is India’s edible oil demand continuing to rise?

 

Experts said India’s edible oil demand is structurally on the rise because of both population growth and growing affordability among middle-income households.

 

According to an assessment by NITI Aayog, the government's policy think tank, India’s edible oil demand is projected to rise to around 31 million tonnes (MT) by 2047–48 from the 2019-20 level of 22 MT, while domestic production of edible oils is estimated to grow to around 24 MT from about 12 MT in 2019-20.

 

That projected gap of around 7 MT between demand and supply means India will continue to depend heavily on imports in the coming years, assuming conservative economic growth of over 6 per cent per annum.

 

“Being an essential commodity, it is difficult to control consumption. The solution lies in increasing production and productivity to meet growing demand and reduce imports,” said BV Mehta, executive director of industry body Solvent Extractors' Association of India (SEA).

 

How are population growth and incomes driving edible oil demand?

 

According to industry estimates, India's demographics play an important role in the rising demand. The country adds around 14 million people every year to its population, and even modest increases in per capita consumption translate into substantial additional demand. According to industry estimates, annual population growth alone requires an additional 250,000 tonnes of edible oil demand every year.

 

At the same time, per capita consumption of edible oils rises by around 300-500 grammes annually as incomes improve. This translates into an additional 400,000 tonnes of demand every year.

 

Taken together, India requires nearly 600,000-700,000 tonnes of additional edible oil annually merely to meet normal demand growth.

 

According to industry players, this additional demand can be met by either increasing domestic oilseeds production by almost 2 MT every year from the current levels of around 40-41 MT, failing which it must be met through imports.

 

“If domestic oilseed production does not rise proportionately, imports will continue to increase,” Mehta said. A snapshot of India’s rising consumption of edible oils was found in recent months when the country’s imports continued to rise despite increasing prices, taking even traders by surprise.

 

Data shows that between November 2025 and April 2026 (the first six months of the 2025-26 edible oil year, which runs from November to October), India imported close to 7.9 MT of vegetable oils (edible as well as non-edible), which was almost 13 per cent more than the same period last year.

 

In April 2026 alone, while the world faced the turmoil engendered by the West Asia crisis, India imported over 1.31 MT of vegetable oils, a 34 per cent jump over the same period last year.

 

On a fiscal year basis, in FY26, SEA data show that India's edible oil imports rose 3 per cent to 16.65 MT, up from 16.18 MT, driven largely by a sharp jump in duty-free imports from Nepal.

 

Industry players said the import spike, despite the uptick in global edible oil rates due to the West Asia conflict, is evidence of rising consumption of edible oil by Indians.

 

Trade sources said prices of palm oil and soybean oil in international markets have increased by $150-$200 per tonne over the past year, while the rupee has weakened by nearly 13-15 per cent, significantly increasing import costs. In addition, freight and insurance expenses have also surged sharply because of geopolitical tensions and disruptions in global trade routes, particularly the Strait of Hormuz, which has become a virtual no-go zone over hostilities involving Israel, the US, and Iran.

 

Freight charges from Brazil and Argentina, for instance, have risen from around $80 per tonne earlier to nearly $150 per tonne. Freight rates from Malaysia have also climbed sharply, while shipping costs from the Black Sea region have nearly doubled. Apart from imported crude edible oil prices, input costs for packaging materials and processing chemicals have also increased substantially, adding to inflationary pressures across the edible oil value chain.

 

“Ultimately, all these costs get passed on to consumers,” an industry official said.

 

Market participants expect edible oil prices to remain elevated over the next few months unless geopolitical tensions ease significantly.

 

Despite the pressure on prices, industry representatives maintain that discouraging consumption alone cannot solve India’s import dependence. Instead, they advocate expanding output from both traditional and non-traditional sources of edible oils.

 

Can alternative edible oil sources reduce India’s import dependence?

 

India still has substantial untapped potential in rice bran oil, cottonseed oil, and several minor oils, industry executives said.

 

“Rice bran alone can produce nearly 1.8 million tonnes of oil. Current production is much lower, and output can increase by 300,000-400,000 tonnes. Cottonseed oil production can also increase substantially because raw material availability already exists,” Mehta said.

 

Industry officials also cautioned that rising crude oil prices and higher fuel costs could add further pressure on food inflation.

 

“Edible oil prices have already risen because international prices, freight, insurance, and input costs have all gone up simultaneously. If global tensions continue, prices may remain under pressure but whether that would cut down consumption is difficult to say,” another industry executive noted.