India’s edible oil import mix is undergoing a measurable rebalancing, driven by variations in global supply conditions, price behaviour, regional trade arrangements, and changes in domestic consumption patterns. The Indian Vegetable Oil Producers’ Association (IVPA), responding to India Ratings & Research’s (Ind-Ra) latest report on expected trends in OY25 and beyond, underscored that the current adjustments are not a centrally orchestrated shift but the result of evolving cost structures, supply conditions, and policy influences across producing regions.
Changing Composition of India’s Edible Oil Basket
Palm oil, historically the largest share of India’s edible oil import profile, has maintained volumes in the range of seven to eight million tonnes annually. At the same time, soybean oil imports have increased from roughly 3.5 to 5 million tonnes, while sunflower oil imports have risen from 2.5 to nearly 3.5 million tonnes over recent years. According to IVPA, these shifts mirror the interplay between global price movements, supply variations, and consumption trends in Indian households and industries.
Palm oil prices have remained elevated due to constrained export availability from Indonesia and Malaysia, influenced by domestic biodiesel blending mandates and weather linked production challenges. In contrast, soybean and sunflower oils have provided more consistent pricing and diversified sourcing from South America, the Black Sea region, and other markets, offering refiners more options to manage volatility in a price sensitive environment.
A further contributor has been the inflow of refined soybean oil from Nepal under duty free provisions of SAFTA and the India-Nepal Trade Treaty. These imports, entering at zero duty, bypass domestic refining units, resulting in lower utilisation and narrowing margins for Indian processors. IVPA noted that the implications extend across investment flows, job creation, and downstream value addition that are central to the domestic refining ecosystem.
At the consumer level, urban households and branded manufacturers are increasingly opting for soft and blended oils due to taste preferences, perceived health attributes, and targeted marketing. This steady diversification is influencing the broader import and consumption structure within the country.
Industry View on Strengthening the Value Chain
IVPA emphasised the need to reinforce India’s capabilities from oilseed production to refining and value addition. Enhancing productivity in oil palm and other oilseed crops, improving seed quality, widening farmer access to markets and technology, and ensuring balanced trade policies will be essential to reducing import dependence while safeguarding affordability for consumers. The association highlighted that India has historically adjusted quickly to global variables, and the current phase requires converting reactive shifts into forward-focused strategies to preserve domestic value creation and employment.
Soybean Oil Set for a Steep Rise in OY25, Says India Ratings
India Ratings and Research (Ind-Ra) projects a sharp increase in India’s soybean oil imports in OY25 (oil year: November-October) as elevated crude palm oil (CPO) prices encourage substitution. The agency anticipates that while CPO prices may ease in 2026 due to higher output, Indonesia’s plan to increase biofuel blending could tighten supply in the latter half of the year, creating upward pressure.
Soybean oil prices have faced downward movement amid Argentina suspending export duties and weak Chinese demand for US supplies. A revival in Chinese imports following US tariff reductions could provide price support. Sunflower oil, meanwhile, is likely to remain firm in the near term due to reduced output in Ukraine.
Ind-Ra expects India’s overall edible oil import dependency to remain high in the near-to-medium term, with total imports declining only marginally in OY25. Lower kharif acreage may further weigh on oilseed output in OY26. Domestic refiners, however, are expected to benefit from the widened duty differential between refined and crude oils introduced in July 2025.
Marginal Decline Expected in Total Imports for OY25
Edible oil imports are projected to fall slightly to about 15.5 million tonnes in OY25 (OY24: 16 million tonnes; OY23: 16.5 million tonnes), despite a 50% year-on-year surge recorded in September 2025. Imports over 11 months of OY25 stood at approximately 14 million tonnes, reflecting a 4% decline driven primarily by a 15% drop in palm oil imports due to higher prices.
India also imported roughly 0.6 million tonnes of duty-free oil, mainly refined soybean oil, from Nepal under SAFTA in the first 10 months of OY25. This kept overall import dependency at an estimated 55% (OY24: 56%). The government aims to reduce this to about 30% by OY28 through improved farming methods in mustard, groundnut, sesame, soybean, and sunflower, along with expanded palm oil cultivation in the Northeast.
Palm Oil Substitution Accelerates as Soybean Oil Gains Traction
According to the Ind-Ra report Palm oil imports are expected to fall to around 8 million tonnes in OY25 (OY24: 9 million tonnes; OY23: 9.7 million tonnes). Elevated prices through much of the year pushed buyers towards soybean oil, which is projected to jump by 40% year-on-year to 4.7-4.9 million tonnes.
Palm oil imports declined 15% year-on-year to approximately 7 million tonnes across 11 months of OY25, reducing its share in the import basket to 50% (11MOY24: 56%). Soybean oil imports rose to 4.4 million tonnes in the same period (11MOY24: 3.1 million tonnes). September 2025 alone saw soybean oil imports of 0.5 million tonnes, the highest since July 2022.
Sunflower oil imports fell 20% to 2.6 million tonnes in 11MOY25 due to higher prices, with full-year volumes expected at 2.8-2.9 million tonnes (OY24: 3.5 million tonnes).
Price Differentials Continue to Drive Purchasing Decisions
CPO has traditionally been cheaper than soybean and sunflower oils, making it more prevalent in the institutional and food service sectors. From 2019 to 2023, crude soybean oil (CSO) traded at US$120 to 140 per tonne above CPO. This reversed in 2024 and persisted into early 2025. By May-August 2025, CSO again moved US$ 70 per tonne above CPO, with the difference narrowing to below US$ 20 per tonne in September.
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Sunflower oil, typically priced US$ 200 per tonne higher than palm oil, faced significant volatility after the onset of the Russia-Ukraine conflict. The gap surged above US$ 350 per tonne in 2022, then narrowed as sunflower oil prices fell and palm oil prices rose. In much of 2024, sunflower oil import prices dipped below palm oil. However, reduced global output once again pushed sunflower oil to around US$ 130 per tonne above CPO (US$ 80 above CSO) in the first half of FY26.
Outlook for Palm Oil Prices and Supply in 2026
Malaysia’s CPO production for 2025 is expected at around 20 million tonnes. Inventories reached a two-year high of 2.4 million tonnes in September 2025, with seasonal easing anticipated by year-end. Output in 2026 is projected to rise due to improved fresh fruit bunch yields and extraction rates.
Indonesia recorded an 11% year-on-year increase in production to 33.5 million tonnes in the first seven months of 2025. The government’s decision to raise biodiesel blending from B40 in 2025 to B50 in 2026 could increase domestic demand by roughly 5 million tonnes, reducing the exportable surplus. Implementation has now been shifted to the second half of 2026, and discussions on potential export restrictions remain ongoing.
Combined increases in output from Indonesia and Malaysia, together accounting for 80 to 85% of global production, could ease prices, but Indonesia’s expanded blending programme may tighten supply in late 2026. CPO (CIF India) stood at US$ 1164 per tonne in September 2025, up 9% year-on-year.
Geopolitical and Climatic Factors Shape Soybean and Sunflower Oil Prices
Global soybean oil production rose to about 69 million tonnes in MY25 (MY24: 64 million tonnes) and is expected to reach 70-71 million tonnes in MY26, broadly aligned with consumption. September 2025 saw CSO at USD1182 per tonne (September 2024: USD1045 per tonne). Argentina’s suspension of export taxes on soy, corn, wheat, and derivatives, along with softer US demand from China, has exerted downward pressure. A revival in Chinese buying following reduced US tariffs could stabilise prices.
Sunflower oil production fell 10% year-on-year to around 20 million tonnes in MY25 due to adverse weather in Ukraine. Ind-Ra expects similar challenges in MY26. Output in Russia may recover partially, while EU volumes remain broadly stable. September 2025 sunflower oil prices rose 20% year-on-year to about US$ 1300 per tonne (CIF India).
Domestic Oilseed Production Outlook and Impact of Kharif Acreage Trends
Kharif 2025-26 oilseed sowing declined by roughly 5% to 19 million hectares as of 3 October 2025, largely due to a shift from soybean to maize driven by strong ethanol demand. This may affect OY26 production.
For OY25, oilseed output is expected to rise 7% year-on-year to 42.6 million tonnes, supported by a 16% increase in soybean production to 15 million tonnes. Edible oil production is consequently expected to increase 7% to 13 million tonnes, despite largely unchanged acreage.
Wider Duty Differential Boosts Domestic Refining
The Indian government’s decision to reduce import duty on crude palm, soybean, and sunflower oils to 16.5% (from 27.5%) from 30 May 2025 widened the duty differential between crude and refined oils to 19.25 percentage points (previously 8.2 points). This has made domestic refining more economically favourable. Imports of refined, bleached, and deodorised palmolein were negligible between July and September 2025, compared to nearly one million tonnes imported in the first eight months of OY25 (OY24: 1.9 million tonnes), which had accounted for 23% of all palm oil imports.
