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India is among the world’s largest oilseed producers but remains heavily dependent on imports to meet its growing edible-oil demand. During the first six months of the 2025–26 oil year, vegetable-oil imports reached about 7.94 million tonnes, with an import bill of nearly ?87,000 crore. NITI Aayog estimates that India imported around 16.5 million tonnes in 2022–23, meeting only 40–45% of its requirement domestically.

Why Does Import Dependence Persist?

Domestic oilseed production has improved: between 2014–15 and 2024–25, oilseed area increased by over 18%, production by nearly 55%, and productivity by around 31%. Yet this has not matched the faster expansion of edible-oil consumption. Soybean, rapeseed-mustard and groundnut together account for more than 92% of oilseed production, creating concentration risks.

The major structural constraints are:

• Low productivity: Average oilseed yield was about 1,353 kg/ha in 2022–23, against the target of 2,112 kg/ha by 2030–31.
• Rain-fed agriculture: Nearly three-fourths of oilseed area lacks assured irrigation, making production vulnerable to drought and monsoon variability.
• Weak price assurance: Unlike rice and wheat, oilseeds do not enjoy equally predictable procurement, despite MSP.
• Cheap imports: Palm oil from large producers such as Indonesia and Malaysia can undercut domestic oils. Reduction of basic customs duty on crude palm, soybean and sunflower oils from 20% to 10% in 2025 helped consumers but can weaken incentives for domestic farmers.
• Weak value chains: Poor seed replacement, inadequate storage and processing infrastructure, fragmented aggregation and limited extension services constrain farm-level productivity.

Government Response

The National Mission on Edible Oils–Oilseeds (NMEO-Oilseeds) seeks to raise domestic production, while NMEO–Oil Palm promotes oil-palm cultivation. MSP and the Price Support Scheme provide a price-support mechanism for farmers.

However, the NMEO-Oilseeds target of increasing output from 39 million tonnes to 69.7 million tonnes by 2030–31 requires nearly 79% growth, while the targeted expansion in area is only about 14%. Thus, productivity enhancement is central to achieving self-reliance.

Way Forward

India should move from a tonnage-centric approach to an oil-output and income-centric strategy. This requires assured and predictable procurement, rational import-duty policies, better quality seeds, micro-irrigation and watershed development, and region-specific oilseed clusters involving FPOs, storage, testing and processing facilities.

Rice fallows and intercropping can expand acreage without compromising food security, while greater recovery from rice bran, cottonseed and other secondary sources can diversify supply. Oil-palm expansion should remain confined to ecologically suitable, water-secure areas.