Can reducing cooking oil save India’s forex reserves?

Prime Minister Narendra Modi recently exhorted Indian households to slash the use of cooking oil to improve the health of the country’s finances and their own health.

“India spends a lot of foreign exchange to import cooking oil. If every family reduces the consumption of edible oil… I have repeatedly said that we should reduce edible oil consumption by 10%. If we reduce the intake of vegetable oil, even that is a great service to the nation,” PM Modi urged citizens, adding that this will improve the health of India’s forex reserves and the health of every family.

While everyone knows about the health benefits of having less vegetable oil in food, what most people don’t know is the amount of vegetable oil that India imports each year.

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India’s total demand for edible oil is 27 million tonnes annually. While the domestic production is about 11 million tonnes, around 16 million tonnes of vegetable oil are imported each year. During the financial year 2025-26, India imported vegetable oils worth $19.5 billion.

That’s a significant drain on foreign exchange reserves for a commodity consumed daily by millions of households.

The crude oil impact

Edible oil prices are also indirectly linked to the volatility in crude oil prices. That’s because several countries, such as the United States and Indonesia, use vegetable oil as biodiesel. And whenever the price of crude oil increases, demand for biodiesel also goes up.

“This year, we expect about 67 million tonnes of edible oil to be used for biodiesel. The global production is expected to be around 272 million tonnes. While demand for biodiesel is increasing, the supply is the same as last year,” BV Mehta, executive director of The Solvent Extractors’ Association of India, tells Business Today.

A forecast for El Niño has further added to the industry’s woes. “An El Niño or a prolonged dry spell could hit oilseed output in India,” says Mehta. “If the oilseed crop is hit by El Niño, we may have to import more,” he adds.

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