India’s ambitious push toward oil palm cultivation has entered a decisive phase. The recent entry of several companies into oil palm plantation development across Andhra Pradesh, Telangana, the North-East and other states reflects both strategic intent and national urgency. At a time when India continues to remain heavily dependent on imported edible oils, especially palm oil, the sector carries enormous significance for the country’s long-term food and economic security.

Yet, despite policy momentum and substantial incentives under the National Mission on Edible Oils–Oil Palm (NMEO-OP), one uncomfortable reality continues to persist: expansion in acreage alone will not ensure success. The real challenge before India today is productivity, sustainability and farmer confidence.

Oil palm in India cannot be approached merely as another agricultural expansion programme or a conventional FMCG-linked sourcing business. It is a highly specialised, long-gestation, smallholder-driven agri-enterprise that demands sustained engagement, technical expertise, patient capital and deep farmer relationships over decades. The Indian model is fundamentally different from the estate-based plantation systems of Indonesia or Malaysia. Here, success depends almost entirely on the confidence, continuity and economic participation of lakhs of small and marginal farmers.

A structural challenge, not a temporary slowdown

Ground-level realities across many states indicate that farmer adoption of oil palm has slowed in recent years, despite relatively attractive prices of Fresh Fruit Bunches (FFBs). In Andhra Pradesh and Telangana, farmer response has improved modestly during FY 2025-26, but the momentum remains uneven and far below expectations in most other states. This should not be viewed as an execution failure alone. It is a structural challenge.

Farmers today are informed, cautious and outcome-driven. Oil palm is not a seasonal crop decision; it represents a commitment of nearly 30 years. A farmer evaluating oil palm is effectively assessing long-term water availability, future income stability, market assurance, government policy continuity and company credibility — all at once.

Therefore, the hesitation among farmers in several states is not irrational. It reflects economic realism.

The geographic reality India must accept

India is currently pursuing oil palm cultivation across more than 14 states, including the North-Eastern region. However, except Andhra Pradesh and Telangana, very few states have demonstrated substantial progress in terms of productivity, plantation quality and effective cultivated area.

One of the major strategic mistakes being repeated is excessive geographical spread without adequate concentration. Expanding scattered plantations across multiple districts and mandals often dilutes impact, weakens farmer confidence and reduces operational efficiency. Oil palm succeeds through cluster development — not fragmented expansion.

Strong concentration creates visibility, logistical efficiency, technical support systems and eventually farmer-to-farmer confidence. In contrast, thinly distributed plantations make it difficult to build viable supply chains and economically sustainable processing infrastructure.

Ultimately, the financial consequences are borne by the implementing companies themselves. In the absence of adequate FFB availability, oil palm mills struggle to operate economically and capacity utilisation remains critically low for years. Some states have already witnessed such challenges, including Goa, Odisha and Mizoram.

This is why oil palm must be treated not as a short-term expansion race, but as a long-term institution-building exercise.

Productivity must become the national benchmark

India’s biggest concern today is not merely area under plantation — it is poor productivity. In many rainfed or partially irrigated regions outside Andhra Pradesh and Telangana, average FFB yields remain significantly below global standards. India’s overall average productivity in mature plantations is still estimated to be below 8 tonnes FFB per hectare annually in many regions, which is economically unsustainable.

By contrast, Andhra Pradesh and Telangana — where irrigation support, technical monitoring and farmer engagement have historically been stronger — have demonstrated productivity level around 19 tonnes per hectare or more annually in mature plantations.

This difference alone explains why productivity, not plantation numbers, should become the central performance indicator for the industry. If productivity remains weak, neither farmers nor companies will sustain long-term economic viability.

The industry must, therefore, honestly acknowledge another important reality: under Indian conditions, especially in new geographies, break-even timelines are far longer than generally projected. Historically, companies become EBITDA positive only after eight to ten years — sometimes even later. Accepting a realistic 10-year horizon is therefore essential for serious policy and investment planning.

What India must do differently

The next phase of India’s oil palm journey requires structural correction, not cosmetic acceleration.

First, both governments and companies should establish dedicated and independent oil palm verticals. Oil palm cannot be managed as an extension activity under general agriculture or horticulture administration. It requires specialised leadership, focused manpower and long-term strategic continuity. Similarly, companies entering this sector must treat oil palm as an independent profit centre with a long-gestation business horizon.

Second, performance evaluation systems need a complete shift in orientation. Current approaches often overemphasise annual plantation targets. Instead, evaluation should focus on measurable long-term outcomes such as: FFB yield per hectare according to crop age benchmarks, Effective area percentage, Survival rate of plantations, Farmer retention levels, Irrigation sustainability and Productivity readiness of plantations. Survival percentage, in particular, should never fall below acceptable thresholds.

Third, there is an urgent need to strengthen field-level presence. Oil palm is fundamentally a relationship-driven business. Farmers require continuous technical guidance, frequent interaction and long-term confidence-building measures. Unfortunately, in several regions today, meaningful field engagement appears inadequate. Recruiting experienced and committed field professionals, maintaining continuity in farmer relationships and building local trust are far more important than pursuing contractual efficiency alone. Oil palm cultivation demands “handholding agriculture,” not remote administration.

At a broader national level, recent public messaging by the Government of India encouraging moderation in edible oil consumption reflects the seriousness of the country’s growing import dependence and the associated pressure on foreign exchange outflow. While responsible consumption and reduction of avoidable wastage are certainly important, long-term edible oil security for India cannot be achieved through consumption management alone. Sustainable self-sufficiency will ultimately depend upon significantly increasing domestic edible oil production.

In this context, oil palm assumes exceptional strategic importance. Among all major oilseed and edible oil crops cultivated in India — including soybean, mustard, groundnut, sunflower and coconut — oil palm has the highest oil productivity per hectare annually by a very substantial margin. This makes oil palm not merely another plantation crop, but potentially India’s most powerful agricultural instrument for reducing edible oil imports over the long term. Therefore, strengthening productivity, improving farmer confidence and accelerating scientifically sustainable oil palm cultivation are not only agricultural priorities, but also important economic and strategic imperatives for the country.

The opportunity is still enormous

Despite present challenges, India’s oil palm story remains one of the country’s most important agricultural opportunities. India is one of the world’s largest importers of edible oils, and palm oil continues to dominate consumption patterns because of its affordability and versatility. Every successful hectare of domestic oil palm cultivation contributes directly toward reducing import dependence, strengthening rural income and improving national economic resilience.

Moreover, global uncertainties in edible oil supply chains make domestic production increasingly important from a strategic standpoint. The potential certainly exists. What is needed is disciplined execution, realistic expectations and institutional patience.

A call for strategic patience and sectoral maturity

More than three decades have passed since organised oil palm development began in India, yet the overall progress in area expansion and productivity remains substantially below national expectations. However, this should not lead to pessimism. Instead, it should encourage a more mature understanding of the sector.

Oil palm in India is a niche and technically demanding agricultural ecosystem. The learning curve is steep and often unforgiving. But with the right structural reforms, focused implementation and farmer-centric execution, the sector can still emerge as one of India’s most significant long-term agricultural success stories.

The Ministry of Agriculture- Government of India, state horticulture departments and implementing agencies must now move beyond periodic reviews and short-term numerical achievements. What the sector requires is continuous strategic push, specialised institutional support and long-term accountability. Most importantly, the focus must decisively shift from “how many hectares were planted” to “how many hectares are productive and sustainable.”

If the recommendations outlined above are implemented seriously, they can substantially improve farmer confidence, accelerate scientifically viable expansion and position participating companies as credible long-term partners in India’s edible oil security mission. The opportunity remains alive. But the future of oil palm in India will ultimately belong not to those who expand the fastest — but to those who build productivity, trust and sustainability patiently over time.

The author is former CEO – Oil Palm Plantation, Godrej Agrovet Ltd. , Consultant – Palm Oil Production & Plantation Development, Kolkata, West Bengal, India. Views expressed are personal..

Published on May 23, 2026