India's Palm Oil Imports Impacted by Indonesia's Biodiesel Policy

24-Apr-2026 01:00 PM

Mumbai: Indonesia—the world's leading producer, consumer, and exporter of palm oil—is set to implement its 'B50' program starting July 1, 2026. Under this initiative, the mandatory utilization of crude palm oil in the country's biodiesel production is set to rise to 50 percent, up from the current level of 40 percent.

This move is expected to deplete Indonesia's exportable stocks of palm oil, potentially driving up prices. India is the world's largest importer of palm oil, with a significant portion of its requirements being sourced directly from Indonesia. Additionally, India also imports palm oil from other nations, such as Malaysia and Thailand.

Any disruption to imports from Indonesia would necessitate that India increase its palm oil imports from other nations; however, the pool of such alternative supplier countries is limited. Consequently, it remains doubtful whether these other nations can adequately compensate for the shortfall created by the reduction in Indonesian supplies. As a result, the supply situation for edible oils—and specifically palm oil—in India could face a growing crisis in the coming months.

Amidst supply disruptions and rising prices caused by the ongoing crisis in West Asia, numerous countries are being compelled to revise their fuel policies. Palm oil is also utilized in the production of biodiesel in countries such as Malaysia and Thailand.

Given the apprehension regarding potential disruptions to imports from Indonesia, India will need to actively seek out alternative sourcing channels. Indonesian supplies alone account for approximately 60 percent of India's total annual palm oil imports.

With India importing roughly 4 to 4.2 million tonnes of palm oil annually from Indonesia, finding a viable substitute for such a massive volume will be no easy task. Currently, palm oil prices in Malaysia and Thailand tend to be $5 to $10 per tonne higher than those in Indonesia—a price differential that could widen further in the future. Nevertheless, the shortfall in palm oil supplies could potentially be offset by increasing the imports of alternative edible oils, such as soybean oil and sunflower oil.