• India is one of the major growers of oilseeds. Its vegetable oil economy is the fourth-largest after the US, China and Brazil. Yet the country relies on imports to meet over 70 per cent of its vegetable oil requirements; almost 60 per cent of the requirement is met through palm oil. 
• India has not been able to achieve self-sufficiency in palm oil production despite 40 years of efforts. 

Palm oil potential in India :-

• Apart from being used as common cooking medium, it is used for making a vast array of food and consumer products, right from vanaspati (hydrogenated vegetable oil), ice creams to lipsticks, soaps and shaving foams.
• Since 2001, palm oil consumption in the country has increased from 3 million tonnes to nearly 10 million tonnes that is a growth of over 230 per cent. 
• It is the highest-yielding perennial edible oil crop and needs a fraction of the area used to grow in comparison to other oilseeds. This is indeed potentially attractive in a country like India, where land is increasingly scarce as the population rockets. On a per-hectare basis, oil palm trees are 6-10 times more efficient at producing oil than temperate oilseed crops such as rapeseed, soyabean, sunflower or ground nut.
• The current government has announced a package of Rs.10,000 crore over three years, which is intended to support farmers until the trees begin to yield
• The government has identified nine States with suitable climatic conditions. In November 2015, the government has also allowed 100 per cent FDI in palm oil plantations, a move the industry believes will boost domestic production, bring in more funds and newer technologies into the sector.
• It has price advantage and good digestibility make it readily acceptable as cooking medium. It is also used as a raw material to manufacture oleochemicals used in making soaps, candles etc.

Why India could not increase domestic production:-

• Geographical location :-Although the tree has naturalized in the tropical regions within 20° of Equator; yet the most ideal location for oil palm tree are within the 8° latitude north and south of equator. Thus, India’s mainland is not ideal geographical position for oil palm cultivation.
• Irrigation :-The oil palm tree needs regular rainfall, a characteristic of tropical climates. The hydrology of most states in India is such that it does not support the abundance of oil palm.
• Long gestation period :-Although oil palm has high productivity in comparison to other crops such as mustard. Yet, the cultivator needs to wait for four years for trees to start yielding oil.
• Small farm holdings
  1. The farmers in India have small farm holdings and this makes palm cultivation challenging.
  2. Oil palm is not economical for small landholders and tenant farmers as there is practically no income in the first six years.
• Unstable policy
  1. Domestic prices of Oil Palm are significantly affected by cheaper imports from Malaysia and Indonesia, thus demoralising the production. Further, there is only an ad-hoc and un-remunerative FFB price fixing formula. Further, the financial support and institutional credit to this sector has been insufficient.
  2. By 2012, the government had identified 2 million ha across the country for oil palm cultivation and decided to implement the National Mission on Oilseeds and Oil Palm (NMOOP) under the 12th Five Year Plan (2012-17). Though the Mission received an initial enthusiasm, the targets have been routinely missed.
• Limited investments by private sector
  1. Unlike Malaysia and Indonesia, the entry of large corporate into planting has been limited in India and subject to much regulation including Land ceiling rules.
  2. Moreover, the current import duty is not supportive of oil palm farmers and the industry.
• The Land Ceiling Issue in Oil Palm Cultivation
  1. Land is a state subject in India and various state governments have passed the land reforms acts. Such acts restrict the size of land holdings by individual farmers and purchase of land by non-agriculturists. This land ceiling problem occurs with only Oil Palm because so far Oil palm has not been recognized in India as a plantation crop like tea, coffee and rubber.
  2. This is an important reason as to why land ceiling laws  don’t allow commercial cultivation of oil palm by private companies in India.
• Palm Oil Cultivation and Sustainability Issues :-In recent times, there has been a constant rise in demand of palm oil from all parts of the world. This has led to a high rate of growth in oil palm production at a CAGR of more than 6% both by high yield and high acreage. But this has raised several sustainability issues globally. The major problems created include deforestation; loss of biodiversity; climate change; misuse of pesticides etc.
• Besides, it is susceptible to market and seasonal fluctuations.
• Expensive:-
  1. Farmers harvest almost 65 per cent of the annual yield between June and September and earnings remain low during the lean winter months. 
  2. Like other perennial tree crops, oil palm requires regular pruning of fronds, weeding and watering, which is manually quite expensive.

Way forward:-

• The government needs to provide a level playing field to the domestic refining industry. Otherwise, Indian edible oil importers will be perpetually fighting a losing battle with cheap rival palm oil from top producers Malaysia and Indonesia.
• The key to improve oilseeds production lies in ensuring the availability of quality seeds, bridging the awareness gap in farmers regarding better techniques, developing supportive infrastructure facilities and ensuring an efficiently managed market for better price recovery.
• New location-specific high yielding varieties should be developed.
• Investment in palm oil research and development is a key element and should be stepped up.
• Dissemination of technology is equally important and needs to be strengthened through effective agricultural extension system”.
• Roundtable on Sustainable Palm Oil (RSPO)and Green Palm are such initiatives that promote the sustainable production of palm oil

Conclusion:-

• The palm oil industry deserves the highest priority and encouragement from the government to meet the internal demand of edible oil, resulting in a strong imprint on savings of foreign exchange, employment generation and boosting India’s food security.