India Edible Oil Industry Outlook 2017-2030: Based on Product, Based on Distribution Channel with COVID-19 impact

India Edible Oil Industry Outlook

The Indian vegetable oil economy is the world’s fourth largest after the US, China and Brazil, harvesting about 25 million tonnes of oils seeds. India’s share in world production of oilseeds has been around 10%. Although, India is a major producer of oilseeds, per capita oil consumption in India is only 10.6 kg/annum which is low compared to 12.5 kg/annum in China, 20.8 kg/annum in Japan, 21.3 kg/annum in Brazil and 48.0 kg/annum in USA. Vegetable oil consumption has increased due to the rise in household incomes and consumer demand. Also, India has become the biggest buyer of vegetable oils in the world, as rising urban population, changes in consumption patterns and domestic production has failed to keep up with demand have all contributed majorly to the country’s increasing importation of edible oils. India imports half of its edible oil requirement, making it the world’s third largest importer of edible oil. The country buys soya oil from Argentina & Brazil and palm oil from Malaysia & Indonesia. Currently India accounts for 11.2% of vegetable oil import and 9.3% of edible oil consumption. India’s palm oil imports rose at an average of 12% every year in the decade to 2015-16. It imports over 95% of the palm oil it consumes, mainly from Indonesia and Malaysia, the top two producers. Except for the sustainability of the palm oil, the country’s preference for palm oil has to do with its cheaper price compared with other vegetable oils and the proximity of production, which means shorter shipping times.

Commonly used edible oils in India

India has a wide range of oilseeds crops grown in its different agro climatic zones. Groundnut, mustard, sesame, sunflower, linseed and the castor seed are the major traditionally cultivated oil seeds. Groundnut, mustard and soya bean together contribute about 85% of the country’s oil seeds production, whereas coconut is most important amongst the plantation crop. Among the non-conventional oils, rice bran oil and cottonseed oil are the most important. Further, until, 2002, the olive sector in India was predominantly unorganised. The olive oil industry in India is small and largely people use it more for cosmetic purposes than cooking. Today, Indians are moving to better cooking mediums like Olive oil for health and wellness reasons. As olive oil has always placed somewhere between food and medicine and the biggest challenge is to educate the Indian consumers on the benefits of olive oil as a cooking medium. Today, the domestic olive oil consumption is seen rising 25% annually. India’s vegetable oil consumption totals some 23 million tons, of which local production takes up just 7-8 million depending upon the monsoon, but imports make up 15 million tonnes. 70% of edible oil is imported, which is also a challenge to food security.

Import Dynamics

Even in the face of rising demand of palm oil, domestic production will remain way under 10% in the coming years, which essentially means that India will continue to import palm oil in various forms. However, the dynamics of imports are not just dictated by the demand but also by geopolitics. For instance, diplomatic tensions with Malaysia led the Indian government to discourage imports of refined palm oil for the Southeast Asian nation, which results in a precipitous fall in recent months. Further, the Solvent Extractor’s Association of India recently presented the government with a list of demands that would favour local processors, that puts further price pressures in Malaysia and Indonesia, which makes it more difficult to green the palm oil supply chain.

Value and supply chain

The import market is extremely price-sensitive in India. The importers are primarily looking at lowest price points for various grades of palm oils and are not yet overly concerned about how the commodity is produced, which is also the primary barrier to the uptake of ethical palm oil in the country. There are more other obstacles to the increased use of sustainable palm oil, including the various unbranded vegetable oils sold in open markets across the country, and the number of various grades of palm oil used in the supply chain. As, unlike, European and American markets, the market in India is mainly driven by large volumes in the food and cooking oil sectors, that accounts for 90%, with smaller volumes, which accounts for 10%, in consumer goods such as processed food and cosmetics. Here, a significant portion of Indian consumers buy so-called loose palm oil, without any brand association. Therefore, establishing a transparent supply trail becomes difficult in these conditions. Further, palm oil for cooking is primarily used by commercial establishments, government procurement and in low to middle-class households. Government procures imported palm oil in bulk through its trading agencies for distribution and sale to lower income consumers at subsidies rates in the interest of food security during periods of price inflation.

India Edible Oil Market Segmentation

Based on Product

Edible Oil

• Palm
• Soybean
• Sunflower
• Olive
• Coconut
• Other

•  
• Edible Fat

Based on Distribution Channel

• • Offline
  • Online

Overview of India Edible Oil Industry

With a population of more than 1.3 billion, India is the largest consumer of vegetable oil in the world, with palm oil being by far the most used vegetable oil. For the year, 2017, the total domestic consumption of palm oil by India was around 9.4 million tonnes, and in the same year, 99% of India’s palm oil was imported from Malaysia and Indonesia, which indicates that only 1.02% of palm oil was produced domestically. Moreover, Indonesia and Malaysia are the largest producers of palm oil, with 85% of global production. Further, India also imports the largest quantity of palm oil, followed by the European Union with 6.8 million metric tonnes and China with 5 million metric tonnes. The European Union and China use only 46% and 58% of their respective palm oil in food productions, and the rest are used in the cosmetics, oleochemical, and pharmaceuticals products. However, in India, 94.2% of its palm oil is used in food products, especially as base cooking oil. In 2017, with an average price of INR 520.00 per 10 kg, India spent around USD 7.4 billion to import palm oil. Further, with an average yield of 3.86 tonnes of oil per hectare per year, 2,4 million hectares of land in Indonesia and Malaysia are required just to feed India’s demand, which represents 21.2% of the land currently cropped with oil palm in Indonesia. Therefore, increasing demand from India will put pressure on the palm oil producers to increase production, which can be done immediately by increasing the land under palm oil plantation, by means of deforestation. India Palm Oil Industry is expected to reach USD 13.5 billion by 2025, growing at a compound annual growth (CAGR) of 8.2%, during the forecasted period, i.e. 2017-2030.

According to the Goldstein Market Intelligence Analyst, India Edible Oil Industry is expected to grow from around USD 21.6 billion in 2019 to USD 35.4 billion by 2025, growing at a compound annual growth (CAGR) of 8.8% by revenue and 9.9% by volume, during the forecasted period, i.e. 2017-2030.

Edible Oil Mission

As demand takes a beating and imports slump amidst a bearish price trend, the edible oil sector feels the Centre should launch the national mission on edible oilseeds to boost domestic production and achieve self-sufficiency. India depends on imports to meet about 70% of its edible oil requirement, whereas, the edible oil import bill hovers around a whopping USD 11 billion. The national mission, conceived about 2 years ago, aims to boost the production of oilseeds from the current levels of about 30 million tonnes to 45 million tonnes in 3-5 years. Therefore, the increase in production of 15 million tonnes would roughly yield around 5 million of additional oil.

Impact of COVID-19 on India Edible Oil Industry

The global agriculture market has been severely shaken by the COVID-19 pandemic, and palm oil is no exception, particularly in India, which is the largest importer of the commodity. Demand has fallen as the countrywide lockdown on 24 March was imposed by the government to contain the pandemic, that has shuttered restaurants and hotels, major consumers of the oil. Consumption of edible oil which is dominated by the palm oil, has fallen by nearly 40%, since the national lockdown began. Also, the imports of palm oil are also estimated to fall by 25%, by the end of 2020, to the lowest levels in the decade. The domestic palm oil demand has the significant effect on the entire industry. Since, palm oil imports account for nearly 20% of the global trade, it has a big effect on efforts to make the production and processing of the commodity sustainable, ensuring that no further environmental damage is done. The same is true for other major import markets such as China and the European Union, which account for 13% and 10% of the global trade respectively.

Major players of India Palm Oil Industry

• Ruchi Soya Industries Ltd.
• Cofco Agri Ltd.
• Cargill India
• Edible Group
• 3F Industries Ltd.
• Godrej Agrovet
• Adani Wilmar Ltd.
• Troika India
• Aditya Engineers
• Sundex Process Engineers Pvt. Ltd.
• Brissun Technology Pvt. Ltd.
• Tinytech Udyog
• Chempro Technovation Pvt. Ltd.
• GlamTech Agro Process Pvt. Ltd.
• Sundrop
• Dhara
• Saffola
• Sweekar
• Postman
• Dalda
• Rath

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Key questions answered in this India Edible Oil Industry Outlook Report

• What is the total market size by 2030 and what would be the expected growth rate of market?
• What is the total revenue per segment and region in 2016-17 and what would be the expected revenue per segment and region over the forecast period?
• What are the key market trends?
• What are the factors which are driving this market?
• What are the major barriers to market growth?
• Who are the key vendors in this market space?
• What are the market opportunities for the existing and entry level players?
• What are the recent developments and business strategy of the key players?

Reasons to buy this market study

• Facilitate decision-making based on strong historic and forecast data for India Edible Oil Industry
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• Analyze the opportunities in the market for stakeholders and draw a competitive landscape for market leaders
• To strategically profile key players and comprehensively analyze their market shares and core competencies