Palm oil has a large share of consumption, mostly imported

Consumption of major edible oils¹ in India stood at 22 million tonne (MT) in oil year (OY) 2016-17, i.e. November 2016 to October 2017, and was valued at ~Rs 1.4 lakh crore. Domestic production met only 30% of that demand; the rest was imported.

Palm oil is the most consumed edible oil by volume in India, with a share of ~40%, followed distantly by soybean and mustard oils. However, domestic production of palm oil is limited, and over 95% of the requirement is imported, mostly from the world’s top two producers – Indonesia and Malaysia. Consequently, palm oil imports constitute over 60% of the edible oil imports basket today.

We expect palm oil’s domination of India’s edible oil consumption basket to continue in the medium term. Demand is supported by a price conscious domestic market, especially in the east, and the fact that palm oil is the cheapest of the lot. Besides, there is healthy offtake from the commercial segment (restaurants, hotels, food processing), which accounts for nearly 45% of total demand.

¹ 6 major edible oils comprise over 90% of the total edible oil exports, the remaining are sesamum, nigerseed, Castor, linseed, coconut, rice bran, tree and forest origin and solvent extracted