India is the largest importer of edible oils in the world post liberalization of oil imports and the report covers various factors that contribute to this trend as well as interpretation of key indicators. An introduction briefly covers the history of oil import liberalization in India and the duty structure for different crude and refined oils. Market statistics indicate the share of imports, volumes, key trading partners, and consumption characteristics in India. End-market segmentation provides brief information on the share of each category, their demand drivers, and types of oils used. The report also explain the reasons behind imports, the growth of organized players in a market largely dominated by unorganized sector, and the factors challenging domestic production leading to long-term reliance on imports. Data trends cover supply and demand, share of imports, the type of oils imported, and pricing in the local market.

1. Imported Edible Oils - India
December 2008

2. Executive Summary
Edible oil imports have been liberalized since the 19--’s and now attract lower tariffs
No import duty on crude oils in contrast to finished products (refined oils and hydrogenated fat)
Market India is the world’s largest importer of edible oils and market demand is expected to sustain
Loose or unbranded oil accounts for bulk of sales compared to branded and hydrogenated oils
PLE
Demand for imported oils to remain strong due to growing consumption and constrained supplies
Characteristics
SAM
Organized sector, earlier disadvantaged due to sales tax regime, is not growing its market share
Domestic production faces supply-side constraints and inefficiencies thereby ensuring the
dependence on large levels of edible oil imports
Rising consumption accompanied by increasing domestic production but large imports are still
necessary to bridge the gap
Trends Palm and soybean oils account for bulk of imports due to their low prices
Prices have risen at a% p.a. with a dip observed only in 2005 - 2006
IMPORTED EDIBLE OILS – INDIA.PPT 2

3. •Introduction
•Market Size and Growth
•Segments
•Market Characteristics
•Trends
IMPORTED EDIBLE OILS – INDIA.PPT 3

4. India is the largest importer of edible oils and the growing
economy is expected to sustain demand in the market
Overview Size and Growth
• World’s largest net importer of edible oils since 19-- ‘000 MT
• Large population and rising per capital consumption are 6,000 a%
key drivers for this essential commodity
5,500
• Imports account for a% of total consumption
LE
5,000 E
• Imports have risen by b% since ’04-05 while total A C D
domestic production has risen by c% 4,500 B
• Palm and soybean oils dominate imports
MP
• Branded oils account for ~u% of total market
4,000
2004-05 05-06 06-07 07-08 08-09
Regional Consumption
A
SA
North, Central and East
Largest Trading Partners (2003-2008)
Country X
Others
e%
d%
B West
Country W c%
C Central and South a% Country U
D North and Central
b%
E Primarily in urban areas Country V
Source:
IMPORTED EDIBLE OILS – INDIA.PPT 4

5. Loose or unbranded oil without proper packaging accounts for a
large portion of sales compared to branded and hydrogenated
oils
Loose Oil Branded Oil
• Unrefined oils sold without any consumer-ready • Packaged pure refined oil primarily used in
packaging or brand name households
• Demand is largely driven by low income households • Available as sunflower oil (for its health benefits)
LE
as well as institutional customers but as well as rapeseed and peanut oil
P
• Peanut, cottonseed, sunflower seed and rapeseed • Demand is from middle and upper class urban
oils are sold in this manner consumers
increase margins
M
• Traders often use blends, legally or illegally, to
SA Loose Oil a%
b%
Branded Oil
c%
Vanaspati
Vanaspati (Hydrogenated Oil)
• Fully or partially hydrogenated vegetable cooking oil is known as Vanaspati in India
• Mostly manufactured using palm oil and also from soybean oil but typically made from the
cheapest available oils meeting the required standards
• Regulations mandate a% of production to be local but this rule is not effectively enforced
Source:
IMPORTED EDIBLE OILS – INDIA.PPT 5

6. Demand for imported oils will remain strong due to growing
consumption and constrained supply side
Domestic consumption – Edible oils Domestic Production - Oilseeds
Consumption % Growth ‘000 MT
‘000 MT
Growth V 6 40,000
13,000 U
Y 4 30,000
Z
12,000
LE
X 2 20,000
11,000
P
0 0 10,000
10,000 -2 0
2005 2006 2007
• Low but growing domestic consumption
2008
SAM 2009
Low per capita consumption of a kg compared to world
2000 2001 2002 2003 2004 2005 2006 2007 2008
• Low and inefficient production levels of oilseeds
Virtually stagnant averaging at u mtpa
average of b kg Yields are also significantly lower than the world average
Yet overall consumption has grown at a healthy rate of c%
Economic development is Since importing oilseeds is
likely to increase per capita not practical due to
consumption and spur the barriers, oil imports
market become necessary
Source:
IMPORTED EDIBLE OILS – INDIA.PPT 6

7. Rise in consumption is accompanied by increasing domestic
production but large imports are still necessary to bridge the gap
Domestic consumption & supply Imports vs. domestic production
‘000 MT Consumption
Production X Total in ‘000 MT
14,000
Imports Y
12,000
LE
A B C D E F G H I
100%
10,000 90%
8,000
MP 80%
70%
x%
x% x%
x% x% x% x% x% x%
A
60%
S
6,000
50%
40%
4,000
30% y%
y% y% y% y%
20% y% y% y% y%
2,000
10%
0 0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source:
IMPORTED EDIBLE OILS – INDIA.PPT 7

8. Thank you for the attention
The Imported Edible Oils report is a part of Research on India’s Food & Beverage Industry
Series.
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Gagan Uppal Gaurav Kumar
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IMPORTED EDIBLE OILS – INDIA.PPT 8