PALMOILMAGAZINE, NEW DELHI – India, the world’s largest vegetable oil importer, has begun cutting imports significantly as soaring global prices and an energy crisis—triggered by tensions involving Iran—weigh heavily on domestic consumption.
Disruptions in global energy supply linked to conflict in the Middle East have led to fuel shortages across several Asian countries, including India. The impact has been particularly severe in the food service sector, a key driver of vegetable oil demand.
In major cities such as New Delhi, Mumbai, and Bangalore, many restaurants and catering businesses have been forced to scale back operations due to limited LPG supplies. Some operators have even shifted to alternative fuels such as kerosene and firewood to stay operational.
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Demand Drops by Up to 300,000 Tons Monthly
According to Aashish Acharya of Patanjali Foods Ltd., around 40% of India’s vegetable oil consumption comes from the hotel, restaurant, and catering (HORECA) sector. The slowdown in this segment has directly hit national demand.
He estimated that vegetable oil demand has declined by around 250,000 to 300,000 tons per month, with the risk of further contraction if the conflict persists and LPG supplies remain constrained.
The pressure is not only demand-driven. Import costs have also surged sharply. Domestic vegetable oil prices in India have risen by as much as 17% over the past month, driven by currency depreciation, higher logistics costs, and rising freight rates.
Meanwhile, Mayur Toshniwal from Emami Agrotech Ltd. noted that import costs have increased by around 25%.
“With prices at these levels, demand naturally weakens as buyers hesitate to build inventories,” he said.
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Global Producers Feel the Impact
The drop in India’s consumption is expected to create ripple effects for global vegetable oil producers, including major palm oil exporters like Indonesia and Malaysia.
Data from the Solvent Extractors’ Association of India showed that India’s vegetable oil imports fell to around 1.2 million tons in March, down from 1.32 million tons in the previous month.
According to B. V. Mehta, demand in urban areas is likely to remain under pressure in the near term due to ongoing LPG shortages.
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Shifting Consumption Patterns
Amid the crisis, Indian consumers are increasingly shifting toward home cooking. The use of soybean, sunflower, and rapeseed oil has risen at the household level, although overall purchasing remains subdued.
Market players are also avoiding stockpiling in a high-price environment. Buyers are adopting a “hand-to-mouth” strategy—purchasing only what is needed in the short term to avoid holding expensive inventory.
With geopolitical uncertainty still unfolding, the global vegetable oil market is expected to remain under pressure, particularly if the energy crisis continues to disrupt supply chains and consumption patterns in key markets like India. (P2)
