Indian Oil Industry Under Grave Concern: Intervention needed

29-Apr-2025 01:19 PM

Indian Oil Industry Under Grave Concern: Intervention needed
★ India’s edible oil processing industry is facing one of its toughest periods in recent years. Despite government measures like increasing import duties, local oilseed prices—especially mustard—continue to trade below the Minimum Support Price (MSP), raising alarms across the sector.
★ With import volumes climbing, domestic processors are struggling to compete. Cheaper landed oil is flooding the market, eroding margins for local crushers and refiners.
★ A major disruptor is the growing use of DDGS (Distillers Dried Grains with Solubles) in animal feed. As DDGS increasingly replaces traditional oilseed meals like mustard cake, the demand for crushing oilseeds has sharply declined. This shift has made many crushing units unviable.
★ Several small- and mid-sized oil processors and extractors are either reducing operations or preparing to shut shop altogether. “Even after higher import duties, our realizations are below MSP. We cannot sustain at this pace,” said a leading processor from Rajasthan.
★ The entire value chain—from farmers to wholesalers—is under stress. Low returns, weak demand, and policy uncertainty have left stakeholders in a state of paralysis.
★ While the situation benefits end-consumers through lower retail oil prices, the long-term damage to domestic industry could result in overdependence on imports and weakened farmer confidence.
★ Unless the government steps in with a more holistic policy—including managing DDGS, imports, incentivizing local crushing, and ensuring price support—the edible oil sector could face irreversible damage in the coming months.