Considering the impact of the West Asia crisis on the edible oil industry, including the steep increase in the landed cost of oils, the Solvent Extractors’ Association of India (SEA) has requested the Government for policy support to overcome the current situation.

In a memorandum submitted to the Government, SEA highlighted that the landed cost of palm oil has jumped by more than $105 a tonne, and that of soybean oil by $80 a tonne, after the start of the war between the US and Iran.

According to SEA, the C&F (Mumbai) price of RBD palmolein increased by $120 per tonne, from $1115 per tonne on February 27 (pre-war) to $1235 per tonne on May 7 (post-ceasefire).

The C&F (Mumbai) price of crude palm oil (CPO) increased by $105 a tonne from $1150 a tonne on February 27 to $1255 a tonne on May 7.

The C&F (Mumbai) price of soybean oil increased by $80 a tonne from $1230 a tonne on February 27 to $1310 a tonne on May 7.

Stability in trade flows

Sanjeev Asthana, President of SEA, said that while the ceasefire has brought some stability to trade flows, prices across most oils remain elevated compared to pre-war levels.

As fossil fuels become more costly, many countries have increased biodiesel blending mandates to cushion the impact domestically. Indonesia has announced 50 per cent blending as of July 1, and Malaysia has increased blending to 15 per cent from 10 per cent. All these measures, coupled with higher ocean freight costs, have significantly increased the landed cost of imported edible oils in India, he said.

Stating that the ceasefire has had only a limited impact on edible oil prices, he said structural challenges such as high freight costs, elevated insurance premiums, and tight global supply persist.

“For India, this translates into higher import bills, increased working capital requirements, and sustained pressure on domestic prices, with no immediate respite visible in the near term. However, prices will be back to moderate once the war is over,” he said.

Logistics disruptions

The continued vulnerability of key shipping routes has led to a sharp escalation in both freight and marine insurance costs, significantly increasing the landed cost of edible oils into India.

Mentioning that freight rates have nearly doubled in some corridors, he said shipments from Argentina to Kandla/Mundra have risen from about $70-75 a tonne to $140-145 a tonne, while Russia-origin cargoes have increased from around $55 a tonne to $90-95 a tonne. Even supplies from Malaysia and Indonesia have seen freight rates rise from $40 a tonne to $55 a tonne.

On the insurance front, war-risk and marine premiums have also firmed up, with costs increasing from about $15 a tonne to $20-25 a tonne for certain origins. This combined rise in freight and insurance costs is adding a substantial cost burden on importers, compressing margins and contributing to higher domestic prices, with limited immediate relief in sight amid ongoing geopolitical uncertainties, he said.

Vessel unavailability

There is an acute shortage of small, handy vessels, which are typically preferred for palm oil shipments. This has reduced procurement flexibility, delayed cargo movements, and forced importers to rely on larger vessels with greater freight exposure.

Prices of crude-linked derivatives such as polyethylene and polypropylene, which are critical for packaging materials, have risen sharply (estimated 50-60 per cent) since the onset of the conflict. With packaging accounting for 15-25 per cent of total product cost, this is exerting substantial pressure on margins and retail prices, Asthana said.

Currency volatility

Referring to the heightened volatility in currency markets, he said this has further aggravated the cost pressures on India’s edible oil imports. The combined impact of firm international prices, rising freight and insurance costs, and depreciation of the Indian rupee has significantly increased the overall import bill.

Notably, the rupee has depreciated by around 4.8 per cent, from approximately ₹91 per US dollar on February 27 to ₹95.40 per US dollar on May 4, thereby escalating the landed cost of imports. This has had a direct bearing on domestic edible oil prices, increasing working capital requirements for importers and refiners, and adding to inflationary pressures in the market, he said.

Export challenges

India exported approximately 4.5 million tonnes of oil meals in 2024-25, with significant dependence on markets in West Asia and Europe. Besides, India exports de-oiled meals to Far East countries, including China, South Korea, Taiwan, Vietnam, Thailand, the Philippines, and other neighbouring countries, which together account for about 65 per cent of exports.

However, recent global uncertainty is contributing to exchange rate fluctuations, increasing freight, logistics and other expenditures and affecting working capital requirements for industry players.

Asthana said this calls for diversification into alternative, stable markets, particularly in the Far East, and for strengthening trade engagement through focused delegations and buyer-seller interactions.

Suggestions

SEA memorandum requested the Government to subsidise the freight cost for import of edible oil, and give ‘priority berthing status’ to essential commodities such as edible oil (crude edible oil) vessels to help us maintain a smooth supply chain, avoid artificial shortages and in turn control the price inflation.

Apart from seeking higher incentives for the export of agricultural produce, such as oilmeals, the memorandum also sought a 5 per cent interest subvention for the export of oilmeals.

The memorandum sought the Government’s support for timely and appropriate policy interventions to mitigate the emerging challenges, ensure stable availability, and contain cost pressures.

Published on May 11, 2026