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The Indian Vegetable Oil Producers' Association (IVPA) has said Indian edible oil importers have stepped up their palm oil purchases ahead of the festival season, as falling global prices make it economically viable to meet anticipated demand during this period.
Sudhakar Desai, president of the association, told news agency PTI that the cut in import duty on crude edible oils from 20% to 10% has provided "a bit of relief" for consumers, noting that prices would have been higher without the reduction.
He explained that the impact of the duty cut showed up in bulk oils within two days, while it takes up to 25 days to filter through to packaged oils. He added that the association welcomes the new regulations the government plans to introduce soon for the edible oil sector.
He noted that the organised sector would have no difficulty complying with these regulations, unlike the unorganised sector.
"Preparations have already begun. We're seeing an increase in imports during July, as buyers get ahead of the festival season. Over the past three months stocks were almost empty, and now the supply chain is starting to fill up again on the back of seasonal demand," Desai said.
With Durga Puja and other major festivals approaching in early September, consumption of edible oils typically rises as households increase cooking and prepare sweets, making the import of competitively priced palm oil vital for the domestic market.
Vegetable oil imports have fallen by around 100,000 tonnes over the past six months, but are expected to recover in the second half of the year. Desai affirmed that "total vegetable oil imports will be roughly on par with last year."
India imported 16 million tonnes of oils during the 2023-2024 season, which ends in October.
Asked how the hotel, restaurant and catering (HoReCa) sector, along with brands such as Parle that had previously switched to rice bran oil when palm oil prices were high, are responding to the return to palm oil amid its lower prices, Desai said "switching back to palm oil is very easy," noting that palm oil has once again become the most economical choice compared with alternative oils, which remain expensive.
The association is working to stabilise India's import supplies amid challenges stemming from Indonesia's biofuel policies and other factors driving volatility in global palm oil prices.
Biofuel production has become one of the key factors influencing global oil prices, with 21% of global biofuel output directed towards major producing countries such as the United States, Brazil and Indonesia.
Indonesia's potential implementation of its B50 biodiesel initiative could consume an additional 15 to 16 million tonnes of palm oil annually for fuel production, which would tighten food supplies.
"Biofuel volumes have become the determining factor for prices," Desai said, stressing that policies in producing countries directly affect India's import costs.
India imports around half of its vegetable oil requirements, leaving it exposed to supply disruptions from major palm oil exporters. To reduce reliance on imports, the Indian government is seeking to expand domestic oil palm cultivation to one million hectares by 2025-2026, up from current levels.
IVPA has supported this push through partnerships with international seed suppliers and agricultural companies over the past three to four years, and is working with state governments such as Telangana, Andhra Pradesh and the northeastern states to ensure the success of the government's oil palm cultivation initiative.
On the plan to expand domestic oil palm cultivation, Desai said: "We are on the right track, and the process could take six years."