India’s edible oil imports – The other oil imports India needs to worry about

Source: The post on India’s edible oil imports has been created on the article “The other oil imports India needs to worry about” published in “Indian Express” on 20th November 2023.

UPSC Syllabus Topic: GS Paper 3 Indian Economy – Food processing and related industries in India- scope and significance, location, upstream and downstream requirements, supply chain management.

News: The article discusses India’s increasing reliance on imported edible oils over the past 10 years. It highlights the significant growth in imports, the changing domestic production of different oil types, and the impact of global market changes on India’s edible oil market.

About India’s Edible Oil

Rising Imports: India’s edible oil imports have surged, reaching 16.5 million tonnes in 2023, up from 11.6 million tonnes in 2013-14.
Value Fluctuations: Despite the increase in volume, the import value in rupees declined due to a drop in global prices.
Domestic Production: In 2022-23, India produced about 10.3 million tonnes of edible oil, with mustard and soybean as leading contributors. This is significantly less than the amount imported.

What is the impact of high import dependency?

Price Volatility: High import dependency subjects India to global market fluctuations, leading to inconsistent edible oil prices domestically.

Future Risks: The current trend suggests a potential increase in imports, potentially exceeding 20 million tonnes in the future, which could further lower India’s self-sufficiency and expose it to greater global market risks.

Strain on Government Exchequer: High import volumes place a significant financial burden on the government’s exchequer, impacting fiscal balance and potentially diverting funds from other critical areas.

Policy Implications: The reliance on imports presents considerable challenges for policymakers. For instance, the UN Food and Agriculture Organization’s vegetable oils price index significantly increased in 2022, influenced by external factors such as the Russia-Ukraine conflict.

What are the government’s initiatives to overcome the issue of edible oil dependency?

National Food Security Mission – Oilseeds & Oil palm (NFSM-OS&OP): Launched in 2018-19, this scheme focuses on increasing production and productivity of nine oilseed crops and expanding Oil Palm & Tree Borne Oilseeds. It provides incentives for seed production, production inputs, and technology transfer.

National Mission on Edible Oils (Oil Palm) – NMEO (OP): Initiated in 2021-22, it specifically targets oil palm cultivation. Aiming to increase the area under oil palm from 3.70 lakh hectares to 10.00 lakh hectares by 2025-26, it emphasizes development in the North Eastern States and Andaman & Nicobar.

Rashtriya Krishi Vikas Yojana- RAFTAAR (RKVY-RAFTAAR): Supports state-level oilseed programs approved by the State Level Sanctioning Committee, enhancing crop production activities related to oilseeds.

Other initiatives: include raising the Minimum Support Price (MSP) for oilseed crops, establishing a buffer stock for oilseeds, and conducting cluster demonstrations of oilseed crops. These initiatives are aimed at enhancing domestic production and reducing dependency on imports.

What should be done?

Embrace New Technologies: Adopting genetically modified (GM) crops, especially for mustard and soybean, can significantly enhance yields and contribute to increased domestic production.

Support Oilseed Farmers: The government should offer better support, like MSP, to encourage farmers to grow oilseeds. This would shift focus from cereals like wheat and paddy to oilseeds.

Diversify Oil Sources: Expanding the cultivation of alternative oil sources like cottonseed, rice bran, and domestically grown palm can help in increasing overall oil production.

Reduce Import Dependency: Policies need to be formulated to gradually reduce dependency on imports by increasing domestic production, thus insulating the economy from global price fluctuations.

Educate Consumers: Raising awareness about domestic oil brands and encouraging the use of locally produced oils can help in creating a market for homegrown oils.

Question for practice:

What are the key challenges regarding India’s dependency on edible oils, and what are the potential solutions to address this issue?