Rising Dependence on Imports of Pulses & Edible Oils

GS3 – Agriculture

Context

India is increasingly relying on imports of pulses and vegetable oils, even as domestic farmers struggle with low returns for crops like soybean and moong.
This dual trend endangers both self-reliance and the long-term sustainability of India’s agri-economy.

Alarming Rise in Imports

• Pulses Imports (2024–25):
  • 7.3 million tonnes imported worth $5.5 billion
  • Highest on record, surpassing the previous peak in 2016–17
  • Reversal of declining trend due to earlier domestic production gains
• Vegetable Oil Imports (2024–25):
  • Reached 16.4 million tonnes, double the volume a decade ago
  • India now imports over 60% of its edible oil consumption

Key Factors Behind the Trend

1. Weather-Related Production Shocks:
   • The El Niño-induced drought (2023–24) led to a fall in pulses output
   • Production dropped from 27.3 mt (2021–22) to 24.2 mt, fueling inflation
   • Resulted in import duty cuts to stabilize prices
2. Poor Procurement Support:
   • Despite MSP (e.g. ₹8,682/qtl for moong), farmers sell at much lower prices (~₹6,000)
   • Lack of assured procurement for pulses & oilseeds (unlike rice & wheat)
3. Pro-Import Policies:
   • May 2025: Basic customs duty on crude palm, soybean, sunflower oils cut from 20% → 10%
   • Effective tariff reduced from 27.5% → 16.5%

Impact on Indian Farmers

• Unviable Cultivation:
  • Mandi prices are too low to cover costs, making pulse/oilseed farming unattractive
• Sowing Disincentive:
  • Risk of reduced kharif acreage due to poor returns and market uncertainty
• Threat from Cheap Imports:
  • The Soyabean Processors Association of India warned of market flooding by imports
  • Impacts rural incomes and livelihoods

Broader Economic Implications

• Inflation Trends:
  • Pulse inflation: Down to -8.2% (May 2025), helping overall CPI moderation
  • Edible oil inflation: Still high at 17.9%, due to domestic supply constraints
• Strategic Risk:
  • High import dependence in essential food commodities compromises food security
  • Weakens India’s leverage in global agri trade negotiations

Way Forward

1. Enhance MSP Procurement Mechanisms:
   • Institutionalise procurement for pulses and oilseeds, like rice & wheat
2. Promote Climate-Resilient Farming:
   • Support drought-tolerant, short-duration varieties to manage climate risk
3. Strengthen Domestic Processing Industry:
   • Invest in oil extraction and pulse milling units to increase competitiveness
4. Rationalise Import Duty Policy:
   • Periodically review tariffs to balance between price stability and farmer protection
5. Encourage Crop Diversification:
   • Offer incentives, subsidies, and marketing support for farmers to shift toward pulses and oilseeds