Why India Imports 60% of Its Edible Oil: The ₹1.7 Trillion Crisis

India is the world’s largest importer of edible oil, running a massive deficit to keep its kitchens running. Here is how the country went from self-sufficiency to a 60% import dependency, told through the numbers.

The Macro Picture: A ₹1.72 Trillion Bill

The Fiscal Shock: In FY26, India shelled out ₹1.72 trillion to import cooking oils.

The Comparison: This massive import bill is higher than the Union government’s entire annual budget for the farm sector (₹1.59 trillion).

The Dependency: India currently relies on foreign markets for 60% of its total cooking oil requirements. Palm oil alone commands a staggering one-third of all oil consumed nationwide.

Image: Mint

The Consumption Boom

1980–81: The average Indian consumed less than 4 kg of cooking oil per year.

2021–22: Annual per capita consumption skyrocketed to nearly 20 kg, fueled by a consumer shift toward "pure," odorless, colorless, and solvent-extracted refined oils.

The 30-Year U-Turn

The Golden Era (Early 1990s): Backed by "Operation Golden Flow" and the NDDB’s rollout of the homegrown Dhara brand, India achieved nearly 100% self-sufficiency in edible oils.

The Reversal (1991): Post-economic liberalization and joining the WTO, India opened the floodgates to foreign imports. Homegrown mustard and groundnut oils quickly lost ground to cheaper alternatives.

The Slide: Import dependency climbed to 30% by 1998, and accelerated heavily to 70% by 2018 before stabilizing near the current 60%.

The Market Distortions

The Rise of Dalda: This domestic shortfall birthed a massive market for vanaspati (hydrogenated vegetable oil)—a cheap alternative built entirely on imported palm oil that aggressively undercut local oilseed farmers.

The GM Paradox: India strictly bars its own farmers from cultivating transgenic food crops, yet continuously imports genetically modified (GM) soy oil from the US, Brazil, and Argentina.

The Vulnerability Factor

Global prices are currently surging as Indonesia—the world’s top palm producer—diverts its supplies into biodiesel production to hedge against rising crude costs.

Unlike crude oil or fertilizers—where the Indian government heavily regulates and subsidizes retail prices to shield the public—cooking oil enjoys no such safety net. When global prices spike, everyday households absorb 100% of the financial blow.

References -

1. Oiling point: How India went from Dhara to edible oil import dependence - Mint

2. NPTEL course on Food Oils and Fats: Chemistry and Technology