₹84,840 Cr: The Palm Oil Bill India Can’t Ignore

India’s palm oil story is increasingly being shaped far beyond its borders.

Every year, the country consumes 8-10 million tonnes of palm oil, yet domestic production meets only a fraction of this demand.

That leaves India heavily dependent on imports and increasingly exposed to policy decisions, weather conditions and energy demand in major producing countries.

Now, one country is becoming particularly important.

Indonesia supplies more than 40% of India’s palm oil imports.

As the world’s largest palm oil producer pushes ahead with higher biodiesel blending and tighter control over exports, global supplies could come under pressure.

For India, that could mean more than just a rise in cooking oil prices.

Palm oil is a key input across packaged foods, bakery products, personal care, home care and several other industries.

A sustained increase in prices can therefore travel through the supply chain, affecting consumer prices, corporate margins and ultimately the broader inflation outlook.

The scale of India’s dependence is significant.

India is the world’s second-largest consumer of palm oil.

Overall annual edible oil consumption stands at roughly 23-25 million tonnes, with palm oil accounting for a substantial share of the basket.

And around 90% of the palm oil consumed in India goes into food.

But the country produces only a small fraction of what it consumes.

Domestic palm oil production has risen from around 0.21 million tonnes in 2016 to approximately 0.31 million tonnes in 2025.

Despite this increase, the gap between domestic production and consumption remains wide, leaving India dependent on imports to meet its needs.

That dependence comes with a sizable price tag.

India’s edible oil import bill has remained elevated over the past few years, reaching approximately ₹84,840 crore in FY26.

And within those imports, Indonesia stands out.

In FY26, India imported around ₹34,134 crore worth of palm oil from Indonesia, giving Indonesia a 40.2% share of India’s palm oil imports.

This concentration makes Indonesia’s palm oil policy particularly important for India.

Indonesia is moving towards a B50 biodiesel program requiring a 50% palm oil-based biodiesel and 50% conventional diesel blend.

More palm oil diverted towards fuel could mean less supply available for food and industrial uses.

Indonesia is also moving to centralise crude palm oil exports through a state-owned entity, giving the government greater control over export flows.

For global buyers, the implications are straightforward.

Tighter supplies can mean higher prices.

And for India, higher global palm oil prices can quickly feed into domestic costs.

India, meanwhile, is trying to reduce its dependence on imports.

In 2021, the government launched the National Mission on Edible Oils-Oil Palm, or NMEO-OP, with a financial outlay of ₹11,040 crore.

The objective is to expand domestic oil palm cultivation and increase production, thereby reducing the country’s reliance on imports.

The mission targets 6.5 lakh hectares under oil palm cultivation by FY26 and aims to increase crude palm oil production to 28 lakh tonnes by FY30.

The government’s broader objective is clear: build a larger domestic supply base for a commodity India currently sources heavily from overseas.

But even as domestic cultivation expands, the import dependence is unlikely to disappear overnight.

That keeps global palm oil prices relevant for Indian businesses and potentially for investors.

Several listed companies have exposure to the palm oil and edible oil ecosystem.

Patanjali Foods has a strong edible-oil business alongside its broader FMCG portfolio.

AWL Agri Business is one of India’s major food and FMCG companies, with edible oils forming an important part of its business.

Godrej Agrovet has exposure to oil palm along with its broader agri-business portfolio, while Gokul Agro Resources operates across edible and non-edible oil processing.

The investment opportunity, however, is not simply about finding companies that benefit when palm oil prices rise.

It is about understanding where the pressure appears across the value chain.

For producers and processors, higher prices can create an opportunity.

For companies that use palm oil as a key input, the same price movement can put pressure on margins.

For consumers, persistent increases can eventually show up in the prices of everyday products.

And for investors, palm oil’s price may offer an early signal of where food inflation, input costs and consumer-company margins could be headed next.

That makes palm oil an important commodity to watch.

Sources:

1. CNBC TV-18
   
2. USDA
   
3. Ministry of Commerce and Industry
   
4. Reuters
   
5. PIB