NK Proteins Ltd.’s report projects domestic production of vegetable oils likely to increase by 10-15% in FY24

Total imports for oil year 2023-24 is estimated to be about 16.2 MMT vs 17 MMT in the previous year.

Bhavna Shah, Deputy CEO, NK Proteins Pvt Ltd made a presentation on Indian Vegetable Oils Scenario at a prestigious event organised by UOB Kay Hian in Malaysia on May 20, 2024. In her presentation, she highlighted key facts about the Indian Vegetable Oil Industry.

 Key highlights from presentation:

Vegetable Oil Market Dynamics

The domestic production of vegetable oils is projected to increase by 10-15 per cent in 2024. The increase in production is expected due to higher prices, good monsoon season, and robust domestic crop, with rapeseed significantly contributing to the rise. Import duties on vegetable oils are expected to remain unchanged until the conclusion of the ongoing general elections.

Import Projections

Total imports for oil year 2023-24 is estimated to be about 16.2 MMT vs 17 MMT in the previous year. Palm oil imports are anticipated to decline in 2024 (oil year) as it loses market share due to a narrow price difference with soft oils. India’s palm oil imports likely to register a decline from 10.1 million metric tons (MMT) in 2023 to 8.65 MMT in 2024. For soft oils, soybean oil imports are likely to increase from 3.87 MMT in 2023 to 4.2 MMT in 2024 and sunflower oil imports also likely to increase from 3 MMT in 2023 to 3.25 MMT in 2024. While the import of other oils likely to remain unchanged at 0.1 MMT in 2024.

Global shift & push for biofuels in India

Governments worldwide are urging businesses to transition away from fossil fuels. Biofuels are anticipated to play a crucial role in meeting COP 28 targets. India has also committed to reducing emissions by 45per cent by 2030 and achieving net-zero emissions by 2070. Accelerating biofuel adoption is essential for meeting these emission targets, with replacing coal with biomass presenting a swift solution. As the third-largest ethanol producer, India is well-positioned to expand rapidly.

However, the limited availability and rising costs of feedstock are significant constraints to biofuel production. Non-edible sources face barriers such as unavailability, proper cultivation, regulation, high polyunsaturated fatty acids, and low unsaturated fatty acids content, but technological advancements could help overcome these challenges. Utilising used cooking oil (UCO) as a major feedstock could alleviate some limitations. Additionally, utilising by-products from biodiesel production efficiently can help offset the price of biodiesel, making it more economically viable.

Total imports for oil year 2023-24 is