India’s Palm Oil Import Trends 2021

RBD Palm Oil

India

Market & Price Trends

Published Jun 14, 2021

India is the largest buyer/importer of palm oil globally, and the country mainly imports palm oil from Indonesia and Malaysia. Since the beginning of 2021, India’s palm oil imports have been surging up from palm oil-producing countries like Indonesia and Malaysia, with Thailand as the newest entry in May 2021. Thailand provides more price-competitive products than Indonesia and Malaysia as the latter impose progressive tax slabs that increase import prices.

India is the largest buyer/importer of palm oil globally, with the annual volume of imports reaching 7 million tonnes in 2020. The oil is imported for multiple uses, but it is mainly used to process cooking, confectionery, soaps, and cosmetics. India relies on Indonesia and Malaysia to meet its ever-growing palm oil demand by importing on an average 650,000-750,000 metric tons of oil per month. India’s palm oil imports are very price-sensitive, which means that imports from countries offering lower import per-unit prices are preferred. As 2021 began, India’s palm oil imports have been surging up from palm oil production countries, with Thailand as the newest entry in May 2021.

Source: ITC Trade Map. HS Code: 1511

January 2021

In January 2021, India’s crude palm oil (CPO) imports stood at 767 thousand tonnes, increasing 44.9% compared to January 2020. The driving factor behind the surge in importance was reducing import duty from 37.5% to 27.5%. Malaysia was the major supplier of CPO with an import volume of 497 thousand tonnes, followed by Indonesia with 270 thousand tonnes.

March 2021

Import of CPO rose to 506 thousand tonnes in March 2021 from 295 thousand tonnes in the year-ago period, increasing almost 71.5%. Similarly, the crude palm kernel oil (CPKO) import increased by 88.8% from 17 thousand tonnes in March 2021 to 9 thousand tonnes in the same period last year. Palm oil had more than 60% share in the vegetable oil market of India, and the farmers were interested in importing more CPO due to increasing import prices of sunflower oil across the world.

April 2021

India's import of palm oils surged by 84.4% during April 2021 compared to the same period last year. Between November 2020-April 2021, Malaysia's volume of CPO exports has increased from 50 thousand tonnes in April 2020 to 195 thousand tonnes this year, while Indonesia's share reduced to 169 thousand tonnes in April 2021 from 231 thousand tonnes during the same period of the previous year.

May 2021

There was an interesting entry in India’s palm oil import origins during May 2021, when more than 90 thousand tonnes of palm oil arrived from Thailand. India’s palm oil imports from Thailand in May 2021 have increased ten times from a month before as the Thai CPO has become more price-competitive than Indonesian and Malaysian supplies. Thai-origin oil was priced at USD 10 less per tonne than Indonesia and Malaysian origin. The progressive tax slabs set by Indonesia and Malaysia have increased the reference price for palm oil, making alternative options more attractive.

India is likely to remain the largest importer of palm oil for years to come as the population and demand for multi-purpose palm oil grow. Palm oil consumption has increased by approximately 230% over the last two decades in India. Currently, the domestic wholesale prices of palm oil are increasing across India, which is increasing the import numbers. Palm oil prices rose from USD 1.08 per kg in June 2020 to USD 1.91 per kg in June 2021. In the coming months, Thai palm oils will likely maintain their position by offering price-competitive palm oil imports. It is doubtful that Malaysia and Indonesia will restructure their tax slabs.