NITI panel report backs MSP, higher duties as rising edible oil demand poses 'challenge' to self sufficiency

The NITI Aayog report has proposed a roadmap to address challenges, and suggests ways to bridge the demand-supply gap while developing self sufficiency.

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26 Aug, 2025 12:21

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The Centre is staring at a 'substantial challenge' in self-sufficiency in edible oils as the per capita consumption has significantly risen to 19.7 kg/year, outpacing domestic production, a NITI Aayog report has said.

This surge in demand is leading to a greater reliance on imports to meet domestic and industrial requirement, the report said, as India's own production is fulfilling less than half of the requirement. India currently fulfils only 40-45% of the edible oil requirements via domestic production and relies on imports for the rest.

The rise in overall consumption has pushed India's import dependency ratio to 57% in 2022-23.

Among other measures, the report has recommended an increase in import taxes on vegetable oils in order to help farmers facing lower oilseed prices. The report has backed a flexible tariff and Minimum Support Price (MSP) for oilseeds, as a strategic approach to ease out imports. Alternately, a 10-15 percent hike in the duty differential between crude and refined oils is also recommended, as was suggested by the Commission for Agricultural Costs & Prices (CACP).

The NITI Aayog report has proposed a roadmap to address challenges, and suggests ways to bridge the demand-supply gap while developing self sufficiency. The NITI Aayog report said quality seeds alone can contribute significantly by as much as 15-20% to increased domestic production. It added that the vegetable oil space is characterized by small-scale, low-technology plants which are only utilizing 30% of the edible oil refining capacity.

Read More: Govt plans to raise import taxes on vegetable oils to help farmers

The NITI Aayog report has projected a targetted ramp up of oilseeds production to 43 MT by 2030 and 55 MT by 2047, up from 37.96 MT in 2021-22.

The full report can be accessed here.

Calling self-sufficiency in edible oil a 'critical national priority', the report has suggested several recommendations, namely:

-Area retention of oilseeds
-Seed quality assurance
-Advanced production technologies
-Value addition through refining
-Robust market linkages
-Public-private partnerships
-Wider scope of National Mission on Edible Oils
-Incentivizing domestic oilseed consumption

Track share prices of major listed edible oil producers in India - Patanjali Foods, Marico, Adani Wilmar.

India is a significant player in the global edible oil space, ranking fourth after the USA, China, and Brazil, accounting for 9-10% of total worldwide consumption. India is also the world's fifth largest producer of soybean and soybean oil after Brazil, USA, Argentina and China, making up for 3.72% and 2.14% of the global market share. However, despite ranking among the largest producers, the report cited 'significant disparities' in yield compared to other major producers over past many decades.

Read More: India's sunflower oil imports reach record highs

The report also recommends developing the Bundelkhand region in Madhya Pradesh and Uttar Pradesh, which is suitable for oilseed cultivation.

The rice bran industry too can offer potential for domestic edible oil production, the report said, as it can yield nearly a million tonne of oil that can be blended with popular cooking oils.

India was the world's biggest vegetable oil importer in 2022, meeting over 70% of the vegetable oil demand through overseas supply. In July, India's vegetable oil imports rose by 22.2% to 1.9 million MT, the second highest on record. India buys palm oil chiefly from Indonesia, Malaysia and Thailand, while imports soyoil and sunflower oil from Argentina, Brazil, Russia and Ukraine.