It is not just India’s consumers, but also its policymakers who should heave a sigh of relief at the clarification from Indonesian officials that the country’s export ban will not apply to crude palm oil (CPO) but only to RBD (refined bleached de-odorised) palmolein. This clarification may just have averted a crisis for India. With CPO shipments allowed to continue, domestic refining capacities can now be used to process imported raw palm oil into refined cooking oil. Had the blanket ban taken effect, India would have had to scrounge for alternative supply sources to cover for well over a fourth of its annual edible oil import requirement — no mean task. The gap between India’s oil consumption and production has widened significantly in recent years with the 13 million tonne shortfall now being met by imports of sunoil, soyabean oil and palm oil. During inflationary spirals though, consumers tend to substitute other costlier mediums with the more affordable palm oil. In the past year, the Russia-Ukraine conflict and South American crop losses have disrupted sunoil and soyaoil supplies, leading to a 12 to 25 per cent increase in their domestic prices. Thus, palm oil has come to account for 63 per cent of India’s edible oil import basket.
But the rethink by Indonesia may offer only a temporary reprieve. As geopolitical tensions and rising prices of agri-inputs spark food shortages the world over, such clampdowns can recur. This creates an urgent need for India to reduce its import dependence for its food requirements. As part of its Atmanirbhar Bharat mission, the Centre has recently kicked off a new National Mission on Oilseeds and Oil Palm — which aims to provide technology inputs to lift the production of traditional oilseeds, while offering subsidies to bring 1.25 lakh hectares under oil palm cultivation. But given the long gestation periods of 5-6 years needed for palm oil plantations to bear fruit and the environmental blowback faced by producers such as Malaysia and Indonesia, it is moot if the foray into palm oil cultivation will yield quick results. Nudging Indian consumers to go back to traditional consumption patterns that favoured locally grown and seed-derived oils produced from mustard, rapeseed, groundnut and til may offer a better route to reducing import dependence. The excessive dependence on imported edible oil — palm and sunflower — is not a good idea as it exposes the economy to vagaries of international markets. India should exploit its deep heritage in indigenous oils — palm and sunflower oils are new entrants in the last few decades only.
To step up the indigenous production of oilseeds and oils, the government also needs to adhere to predictable policies on imports and tariffs that offer visibility on realisations to farmers and domestic refiners. In the last two years, India’s edible oil policy has been marked by ad-hocism. Even while raising MSPs on oilseeds, the Centre has sharply slashed import tariffs on palm oil and freed up hitherto restricted imports of RBD palmolein. This has discouraged domestic value addition and allowed imported palmolein to flood in, offering stiff price competition to indigenous oils. Apart from striving for a more balanced approach between consumer and farmer interests, the Centre can perhaps consider including indigenous oils in Public Distribution System to improve their affordability.