Iim ahmedabad, Business school in Ahmedabad, India

India spends significant foreign exchange on importing crude oil, gold, and edible oil. Despite repeated announcements of self-reliance in edible oil, imports are steadily rising. The demand for edible oil is increasing annually by about 4.3%, while domestic production grows only by 2.2%. To meet this gap, India imports large quantities of palm oil from Indonesia and Malaysia. If this supply is disrupted, it would lead to severe price hikes, disproportionately affecting the poor. With nearly 60% of our edible oil demand met through imports, building self-sufficiency is not just ideal, but an urgent national necessity. Boosting Domestic Oilseed Production India currently spends ₹1.38 lakh crore annually on edible oil imports in US dollars. If self-reliance is achieved, this money would instead benefit Indian farmers through better returns for oilseed cultivation. However, raising prices alone will not encourage farmers to grow more oilseeds. A combination of improved seed varieties, assured irrigation, and modern agricultural technology is needed. For instance, groundnut is a key oilseed crop with low productivity—only 1,330 kg/hectare—compared to 1,863 kg in Gujarat and 3,913 kg in China. Reliable irrigation can significantly increase yields, making it a strategic focus area for boosting production. Groundnut and Strategic Crop Planning Groundnut requires far less water than sugarcane or rice, making it suitable for areas with limited water. If states like Punjab and Haryana replace rice with groundnut in the Kharif season, groundwater extraction would reduce significantly, improving water table levels. Maharashtra, with a water storage capacity of 60,000 million cubic meters, mainly uses it for sugarcane—a crop that’s already overproduced. Reducing sugarcane cultivation by just one hectare could allow groundnut to be grown on six hectares. This shift can be supported by replacing inefficient open canal systems with piped irrigation, saving over 75% of water currently lost. Policy, Technology, and Crop Diversification Although pipe-based irrigation is expensive, phased implementation and shared investment by farmers—facilitated by bank loans—can make it feasible. Groundnut is ideal due to its 50% oil content and cultural acceptance across India. Mustard oil is preferred in North India, and the government's approval of high-yield mustard varieties could boost production by 20%. However, data on actual cultivation and yield improvements is limited. Traditional oils like mustard, groundnut, safflower, sesame, and coconut are still widely used. Recently, rice bran oil has emerged as a healthy, popular alternative. These diverse sources need strategic expansion to reduce dependency on imported palm oil. Long-Term Strategy and Government Role According to NITI Aayog, by 2047-48, India will produce surplus rice and wheat, enabling a shift of land to oilseeds and pulses. This will require reducing the rate of MSP increases for cereals and substantially increasing it for oilseeds and pulses. If needed, NAFED must be funded adequately to procure oilseeds at MSP. A National Academy of Agricultural Sciences study found a 60% productivity gap between research fields and actual farms. Bridging this to even 20% could boost production by 40%. Agricultural universities must train extension workers to close this gap. These reforms are affordable and crucial for self-reliance.

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