05/09/2007 ( The Economics Times), MUMBAI - India is expected to continue as the largest importer of vegetable oil for at least the next 10 years, owing to slow growth of domestic output as compared to the demand, a top industry official said.
The size of the Indian oilseeds sector is estimated at $16.5 billion inclusive of exports and imports. India is the world’s fourth largest vegetable oil economy, the Solvent Extractors’ Association of India’s executive director BV Mehta said at a presentation on India’s Vegetable Oil Market in Kuala Lumpur.

India is a leading importer of vegetable oil in the world. During FY07, the EU was the world’s largest importers of 17 oils at 10 million tonne, followed by China at 8.6 million tonne and India in the third place at 5.4 million tonne. Each year, India consumes around 12-12.5 million tonne of various edible oils.

Currently, India accounts for 7.4% of the world oilseeds output, 6.1% of oilmeal production, 3.9% of oilmeal export, 5.8% of vegetable oil production, 11.2% of vegetable oil import and 9.3% of edible oil consumption.

Although edible oils are widely consumed, the per capita consumption is around 11 kg a year, considerably lower than in most developed countries. Palm oil and soyabean oil account for almost half of the country’s total edible oil consumption, followed by mustard oil, groundnut oil, cottonseed oil, rice bran oil and sunflower seed oil.

Mr Mehta said that the domestic vegetable oil production of 7-8 million tonne is not sufficient to meet the domestic demand. The trade policy reforms in the mid-1990s fuelled increase in edible oil imports, which now meet 40-45% of the country’s consumption requirement.

The composition of the import basket will, however, depend on relative prices of oils. Currently, crude palm oil/palmolein and crude soyabean oil are the favourites as they provide the lowest price option.

The demand for edible oils is expected to increase from the current level of 12 million tonne to 15.6 million tonne in FY10 and further to 21.3 million tonne by FY15. This assumes a per capita consumption increase of 4% and a population growth of 1.8%, which translates to an overall growth in demand at 6% per annum, Mr Mehta added. He said India will continue its dependence on imports to the extent of about 40% of its consumption requirement. The improvement in yields and the increase in area under cultivation will ensure that the domestic oilseed production is sufficient to meet 60% of consumption requirement.

Commenting on the current scenario of edible oil import by India, Mr Mehta said that from November 2006 to July 2007, India imported close to 3.3 million tonne of edible oils consisting of 2.2 million tonne of palm products and 1.1 million tonne of soft oils.

"The import volume increased by 8% over the same period of previous year. It is expected that during the three months (August-October), arrivals would be 500,000-600,000 tonne per month and the total imports would be 4.7 to 4.8 million tonne for the whole year compared to 4.4 million tonne last year (2005-06)."

“India imports mainly crude oil to utilise its own processing capacity and practically 97%-98% import is in crude form,” he said.