Reasons for the increase in the import of edible oil in India -Finding the right policy for edible oil

Source: The post reasons for the increase in the import of edible oil in India has been created, based on the article “Finding the right policy for edible oil” published in “Business standard” on 19th February 2024.

UPSC Syllabus Topic: GS paper 3-Economy-marketing of agricultural produce and issues and related constraints.

News: This article discusses India’s struggle to become self-sufficient in edible oil production. Despite efforts and policies, there’s still a large gap between domestic production and demand, leading to heavy reliance on imports. The article suggests revising government policies to support local oilseed farmers better.

What is the current state of India’s edible oil production?

India imports over 60% of its edible oil needs.

Production grows by about 2.2% annually, but demand increases almost twice as fast, at 4.3%.

From less than 1.5 million tonnes in the mid-1980s, imports swelled to 16.71 million tonnes in 2022-23, making edible oil India’s third-largest import.

What are the reasons for the increase in the import of edible oil in India?

Heavy Reliance on Imports: Over 60% of India’s edible oil needs are met through imports.

consumer-centric Policies: Government policies have been more consumer-focused, with interventions like limiting stock and trade, and lowering import tariffs (5.5%). These policies harm local producers’ interests and discourage them from expanding oilseed cultivation.

Economic and Social Factors: Growing urbanization, rising population, and higher income levels have contributed to the increased demand for edible oils.

Limited Domestic Growth: Limited Domestic Growth: Despite potential, there’s a significant gap in actual and attainable yields in oilseeds, averaging 60%. This gap indicates underutilized capacity and inefficient farming practices, contributing to insufficient domestic production.

What efforts have been made by India for self-sufficiency in edible oil?

Formulation of Strategies: Union Finance Minister Nirmala Sitharaman announced plans to formulate a strategy for self-reliance in edible oils in her budget speeches, including the Interim Budget speech of the current year.

Research and Modern Farming: The strategy includes research on high-yielding crop varieties and the widespread adoption of modern farming techniques.

Market Linkages and Value Addition: Efforts to establish market linkages, procurement, and value-addition for oilseeds.

Crop Insurance: Initiatives for providing crop insurance to oilseed farmers.

Past Success with the Oilseed Technology Mission: The setting up of the Oilseed Technology Mission in 1986 led to a period of near self-reliance in the early 1990s, known as the “yellow revolution”.

For more information read Artical1, Artical 2

Way forward

To move forward, India should revise its pricing and trade policies to incentivize local oilseed production, reducing the heavy import dependency of over 60%. Learning from the success of the 1990s Oilseed Technology Mission, the focus should be on making oilseed cultivation more economically rewarding.

Question for practice:

Examine India’s current efforts and challenges in achieving self-sufficiency in edible oil production.