The view that steep cooking oil prices would be good for consumers’ health as they will cut back on cooking oil use, lacks nuance  | Photo Credit: V RAJU

Even as policymakers grapple with rising crude oil prices, domestic prices of cooking oil are shooting up sharply on the back of supply constraints and rising import costs. April CPI (Consumer Price Index) numbers showed a 9.2 per cent year-on-year spike in oils and fats, after a 7 per cent increase in the preceding months. There seems to be little relief in sight. India continues to import over 60 per cent of its edible oil requirement and global prices are being propelled upwards by multiple factors.

Crude oil shortages are prompting key palm oil producers such as Malaysia and Indonesia to tighten bio-diesel mandates, shrinking their exports and triggering an 18 per cent price rise in palm oil year-to-date. Sunflower and soyabean oil prices have also risen by 13-19 per cent on higher fertilizer prices, rising freight and shipping disruptions due to the Iran conflict. The rupee’s slide against other currencies is adding to the cost of imports. There are no easy fixes to this problem. In a bid to coax farmers to expand their oilseed acreage in the upcoming kharif, the Centre has announced increases of 3-8 per cent in Minimum Support Prices (MSPs) for the 2026 kharif season. However, oilseed output shrank by 6 per cent in the last kharif season despite 8-9 per cent increases in MSPs. Farmers are said to have switched from soyabean to maize in a bid to cash in on assured demand for maize from ethanol processors.

A tweaking of import duties on edible oil imports to encourage domestic oil production, didn’t work either. Last May, the Centre slashed import duties on crude edible oil from 20 per cent to 10 per cent while retaining the duty on refined oils at over 35 per cent, to prop up profit margins for edible oil refiners. Despite this though, India imported 166.5 lakh tonnes of edible oil in FY26, 3 per cent more than the previous year. The continued influx of palm oil imports, preferred by less affluent consumers for its affordability, kept India’s import dependence high. Some reports now suggest that the Government is considering an increase in import duties on edible oils to conserve foreign exchange. This would be unfair to consumers, who are already dealing with budget constraints. Given that MSP increases and duty tweaks have not improved domestic output, imports are unavoidable to meet demand.

The view that steep cooking oil prices would be good for consumers’ health as they will cut back on cooking oil use, lacks nuance. Lower income households may not be able to afford even the minimum requirement, while affluent consumers may not mind paying more for oil-heavy foods. In the near term, lowering the steep customs duty on refined oils may be the only way to offer relief to households. In the long run, it must become more lucrative for farmers to grow indigenous oilseeds such as sunflower, coconut, mustard and sesame, so that consumers can be weaned away from palm oil.

Published on May 25, 2026