Climate risks, geopolitical tensions, and energy markets reshape vegetable oil imports in India

India’s vegetable oil imports are shifting from a price-driven model to one determined by supply availability. This was stated by Bhavna Shah, Vice President of the Indian Vegetable Oil Producers’ Association. According to her, climate shocks, geopolitical tensions, and energy market dynamics are simultaneously influencing the sector.

Speaking at the 24th International Conference BLACK SEA GRAIN.KYIV-2026, she said: “In the 2026/27 marketing year, three forces will play a key role — weak monsoons, high crude oil prices, and rising global biofuel demand tightening vegetable oil availability.” She added that the overall market trend remains moderately bullish due to India’s stability, efficient supply chains, and policy support.

Shah warned that vegetable oil inflation could edge higher due to weak monsoons, crude oil volatility, fertilizer shortages, gas-linked production constraints, and biofuel mandates reducing global palm oil supply. However, India’s ability to absorb global surpluses may help cushion these risks.

She emphasized that India remains a key destination for surplus volumes: “The country acts as a ‘sink’ capable of absorbing excess supply from anywhere in the world.” She noted that the vegetable oil market should be viewed not only through supply-demand dynamics but also through the interconnection of food, feed, and fuel. With the growing role of biofuels, vegetable oils are no longer just food commodities — energy price fluctuations now directly impact their pricing.

Vegetable oil imports into India remain relatively stable at 15–17 million tonnes. In March 2026, imports rose by 11% year-on-year to 1.19 million tonnes, although the two-month average declined by 12% due to high prices. For the 2025/26 marketing year, imports are projected at 16.5 million tonnes, while domestic production is expected to reach 9.6 million tonnes.

In terms of import composition, sunflower oil demand is expected to remain strong, while soybean oil shipments may face delays due to disruptions, particularly in Argentina. Palm oil continues to dominate due to its price advantage. After April 2026, competition between soybean and palm oil is expected to intensify, including increased exports from China.

India relies on imports for around 60% of its vegetable oil consumption, making it one of the world’s largest importers. Despite government efforts to boost self-sufficiency, including oilseed development programs, a medium-term supply gap persists. According to Shah, future government policies aimed at stabilizing the market, controlling inflation, and securing supplies will be crucial amid ongoing global challenges.

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