01-Dec-2023
To meet domestic demand, India, the world's fourth-largest importer of edible oil, relies significantly on international markets. This blog is a complete resource for anyone interested in importing edible oils into India. The price gap between India and several foreign nations for edible oil makes importing edible oil profitable for many businessmen and merchants. Because edible oil is a food product, its importance is regulated by the Food Safety and Standards Authority of India. So, let’s briefly discuss edible oil imports in India.
The Russia-Ukraine war has had a massive influence on the edible oil business, highlighting India's vulnerability to global edible market fluctuations. Even before the conflict, global vegetable oil supplies had become constrained due to a drought in South America, which reduced soybean yield. Malaysia's palm production has also decreased as a result of Typhoon Rai in December 2021. Drought-affected Canadian rapeseed production fell 35% from the previous year in 2021-22.
Based on India trade data, India is the world's largest importer of edible oil (15%), with import amounts ranging from 66,000 to 1,41,000 crore. Despite the government's efforts to reduce India's reliance on foreign edible oil, India will still need to import 72 lakh tonnes of edible oil worth 70,000 crore in 2030-31, accounting for 23% of the overall requirement of 300 lakh tonnes of edible oils.
As per edible oil import data, import dependency would fall to 23% in 2030-31 from 52% in 2021-22, although India will still require edible oil from other nations.
According to the Oilseeds Division's outcome indicator, the country's oilseeds area will expand from 287.6 lakh hectares in 2021-22 to 338.1 lakh hectares in 2030-31. Oilseed production will also rise from 385 million tonnes in 2021-22 to 602.2 million tonnes in 2030-31.
At the same time, the country's edible oil demand will rise from 267.1 lakh tonnes in 2021-22 to 300 lakh tonnes in 2030-31. However, edible oil production will increase from 126.4 lakh tonnes to 228 lakh tonnes during the same period, leaving a 72 lakh tonnes deficit.
Palm oil (crude + refined) accounts for around 62% of total edible oil imports and is mostly obtained from Indonesia and Malaysia, whilst soyabean oil (22% of total imports) is produced from Argentina and Brazil, based on edible oil importers data.
India is significantly reliant on oil imports, importing approximately 87.3% of its crude oil needs. This equates to around 232.4 million tonnes of crude oil imported in the fiscal year 2022-23 alone.
According to the import data for crude oil, India's reliance on imported crude oil increased to 87.8 percent from 86.5 percent in the corresponding period last year as consumption of fuels and other petroleum products raised while domestic production remained constant.
In April-September, the reliance on imported crude was also higher than the previous fiscal year's 87.4 percent, which was the highest ever for a complete year. If the current fiscal trend continues, oil import dependency could reach a new high this year. Overall, India's reliance on imported oil is a major economic and geopolitical worry. The government is working to lessen its reliance on oil and diversify its energy sources.
Palm oil, soybean oil, sunflower oil, mustard oil, and groundnut oil are the most regularly used edible oils in India. These oils are widely eaten throughout the country, with regional preferences for certain types of oils. The Indian government has enacted several policies to regulate the edible oil market and encourage indigenous production. Import levies, trade restrictions, subsidies, and incentives are all intended to promote self-sufficiency in edible oil production.
Furthermore, the Food Safety and Standards Authority of India (FSSAI) is the regulatory organisation in India in charge of guaranteeing the safety and quality of edible oils. It establishes industry standards and regulations, such as labelling requirements, quality factors, and packaging restrictions.
With expanding urbanisation, changing lifestyles, and increased health consciousness, Indian consumers are becoming more aware of the significance of a well-balanced diet and healthier culinary options. Oils with reduced saturated fats and greater unsaturated fats, such as olive oil, rice bran oil, and canola oil, are becoming more popular. India's economic progress has increased the middle class and disposable income.
As people's purchasing power grows, they have more access to a wider range of edible oils and are ready to spend more money on premium and healthier ones. Consumers in India are seeking healthier choices in their diets due to rising health consciousness and concerns about lifestyle disorders. Edible oils with advantageous properties such as reduced cholesterol, high omega-3 fatty acid content, and vitamin E content are becoming more popular. Furthermore, India is a big user as well as an exporter of edible oils.
India, the world's largest importer of refined oil, has reduced import duties on refined sunflower and soyabean oil to 12.5%, effective June 15. The government action is expected to boost domestic oil prices. Previously, the government reduced import duties from 32.5 percent to 17.5% in 2021.1
The decision is expected to supplement the government's previous efforts to cut the price of edible oils in the domestic market. The Basic Import Duty is a significant component that influences the landing cost of edible oils, which in turn influences domestic prices. Import duty reductions on refined sunflower oil and refined soyabean oil will benefit consumers by lowering domestic retail prices.
Also Read: Official Notification
To import and sell edible oil in India, the following licences and registrations are required:
GST Registration: GST is required in India to sell goods. The sale of edible oil is subject to GST, and GST registration must be sought from the State Government at the location where the firm will be established.
Import - Export Code: Required for any Indian importer or exporter of products. When opening a bank account for the company, obtain the Import-Export Code.
FSSAI Importer License: Required to import food products into India. Obtain an Importer License after the Import Export Code registration.
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Importing edible oil into India can be a profitable but time-consuming endeavour. This article will help you get started with the procedure. You may successfully import edible oil and contribute to India's food security by completing thorough research, comprehending regulations, and following best practices. Speak to our experienced professionals for insights on current market scenarios, and book a free live demo today!
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