How does India's Edible Oil Import Dependency impact its economy?.
International vegetable oil prices have risen in the past one year due to various issues, putting pressure on economy of countries dependent on imports. India being the largest importer of vegetable oil will be affected more.
Current issues in vegetable oil
- Russia war
Russia and Ukraine are largest suppliers of sunflower oil. Due to the ongoing war, the production and supply is being affected.
- Reduction in yield
In several countries of South America, dry weather has caused shortage in soybean yield. This has affected their ability to export the commodity.
- Domestic demand
Domestic demand in countries like Indonesia has also reduced the amount of palm oil they can export. India will be affected the most.
Issues due to import dependency
- Sudden price rise
Import dependency makes a commodity vulnerable to sudden price rise especially due to issues in exporting countries.
- Supply chain delink
Supply chains should function efficiently if products reach from producers to consumers. Any problem in a small part can hamper the whole chain.
Self sufficiency for domestic economy
- Control inflation
If a country is completely import dependent then price cannot be controlled. External factors can cause prices to rise and it can cause inflation.
- Crop diversification
Domestic oil seeds mission can help in crop diversification. Over-dependency on cereal crops can be dangerous on long run.
- Save foreign currency
Imported commodities have to be bought using foreign currency. Reducing foreign imports can save precious foreign reserves.
Thus, vegetable oil sector in India needs to step up and increase production so as to achieve self-sufficiency.
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