India Palm Oil Market Size, Share & Trends Analysis By Product (CPO, Palm Kernel, RBD Palm Oil, Palm Olein), By Application (Edible Oil, Cosmetics, Bio-diesel, Lubricants, Surfactants), And Segment Forecasts, 2018 - 2025

Industry Insights

Palm oil market size in India was valued at USD 5.16 billion in 2015. Increasing demand for edible oils owing to the burgeoning population and improving economic conditions is anticipated to remain the key growth driving factor over the forecast period.

The industry in India presents massive potential for growth since the government has allowed 100% FDI in plantation and has also pledged huge financial aid to farmers in upcoming years. This development is likely to encourage domestic cultivation landscape and generate greater profit margins and opportunities for companies.

Indian palm oil market revenue by product, 2014-2025 (USD Million)

The rapid rise in consumerism has led to increased demand for personal care products, cosmetic, household goods, and packed foods & beverages. This trend is creating lucrative opportunities in non-food applications as well. Moreover, rising demand for these consumer products is subsequently driving demand for derivatives usage in fatty acids, fatty alcohols, glycerin, and active pharmaceutical ingredients manufacturing.

The Indian industry is highly dependent on imports from Southeast Asian nations, particularly Indonesia and Malaysia, which together account for 90% of the overall imports. The government of India has reduced duties to ease supply constraints and form stable supply through imports, thereby offsetting unmet demand.

Gradually increasing domestic production owing to investments through foreign private entities and government funding is expected to propel cultivation in upcoming years. Besides this, ease in investment policies and increasing acreage are few other government mechanisms aimed at boosting domestic production. 

The formulation of National Policy on Biofuels to achieve 20% blending target by 2020 has resulted in ample scope for byproducts in sustainable biodiesel production in the country. This factor is likely to increase the industry’s scope in biodiesel applications & subsequent positive impact on overall market growth.

India Palm Oil Market Trends

Increasing demand for edible oils is expected to drive the India palm oil market. Edible oil factors in as an important component of food expenditure in India. The country is world’s third largest edible oil consumer and the largest importer from Indonesia and Malaysia. Population growth and improving economic conditions have led to a huge rise in processed foods demand.

Traditionally edible oils were an important constituent of household foods and unorganized processed foods industry. With the advent of food chains and growth of packed foods, the demand for edible oils have risen tremendously in the past decade. India accounts for approximately 11% of the global edible oil consumption, 7% of oilseed production, 5% of the edible oil production, and nearly 15% of the global imports.

Over the past decade, edible oils production in the country has registered doubling in its numbers. Total supply of edible oils stood at 12.40 million tons in 2005 and has from then risen to 21.70 million tons by 2015.

Palm oil constituted to a large portion of edible oil imports in India in 2015 with crude palm oil accounting for nearly 55% of the imports while refined palm oil accounted for 20%. Food applications of palm oil largely constitute to the food manufacturing & processing industry. In view of palm oil’s dominance in oil imports and its lower pricing compared to other oils, demand for edible oils would further uplift palm oil consumption in India.

Sustainability issue associated with cultivation is a key restraint for the palm oil market. India’s reputation along sustainability issues need significant improvements considering the country’s raking on Environmental Performance Index. It is evident that sustainability efforts are largely undertaken by multinational companies with local operations. A trend prevailing Indian companies is that short-term financial gains take precedence over long-term sustainability objectives.

From the perspective of domestic production and sustainability, it can be understood that production of palm oil has a direct effect on green cover of the country. Indian palm oil production follows a command area model, wherein state governments allocate land considered as wasteland to oil palm cultivators.

These lands have little value in terms of biodiversity or environmental risk. The concerned governments take due diligence before allocating the said land and cultivators are mandated to sell their entire production of FFB at pre-determined price.

As per RSPO’s assertion, it is unlikely to consider all allocated land as wasteland since there is a high possibility of lands allocated in forest and high conservation value areas. It is also to be noted that palm cultivation would have an impact on water resources and soil quality, thereby affecting surrounding environment and ecosystem.

Product Insights

CPO emerged as the dominant segment with over USD 5 Billion revenue in 2015. The majority of CPO requirement in India is met through exports, which is further processed and finds application in the food industry and households. Steadily rising affluence levels and growing urbanization in India are the key factors driving demand in food applications.

Furthermore, refined derivatives are widely utilized in the bakery and confectionary industry in India owing to their cost competitiveness. The applications in bio-diesel have also increased significantly in recent years due to an unprecedented upsurge in petroleum prices. Furthermore, environmental concerns have also been crucial in promoting CPO applications in lubricants and biodiesel.

India palm oil market share by application, 2015

Palm kernel (PKO) is also anticipated to grow at the modest pace with over 6.3% CAGR. PKO finds application in commercial cooking since it is relatively more cost-effective than other conventional counterparts and also remains stable at high cooking temperature. Increasing demand for protein-rich ingredients in the dairy and beef feed sector is the key factor contributing to growth in India.

Application Insights

Edible oil emerged as the dominant application segment in India. Palm products are widely being utilized as a cooking medium in India owing to increasing health awareness among consumers, surging retail sector, and limited availability of oilseeds, and it’s cheaper pricing.

The Indian edible oil industry is highly fragmented owing to the presence of a large number of organized as well as local and unorganized players. The country is also world’s third-largest consumer and largest importer from Malaysia and Indonesia. Government’s initiatives towards the installation of advanced plant machinery and automation are expected to foster sustainable production in the near future.

Cosmetic applications are anticipated to witness the fastest growth rate, with over 8.6% CAGR over the forecast period. Increasing demand for a wide range of beauty products varying from an inbuilt sunscreen foundation to shampoos that not only cleanse the hair but also improve hair growth is projected to boost demand in upcoming years. Major cosmetic companies are also modifying their product portfolio with innovations as per the changing needs and preferences of consumers.

The industry also finds considerable penetration in the production of bio-diesel and surfactants. These two segment collectively accounted for 3% market volume in 2015. CPO can be refined into very high-grade biodiesel, bio-jet fuel, and other high-demand biochemical like oleic acid. Also, it finds usage as a key raw material and active washing substance in laundry detergents and household cleaners.

India Palm Oil Market Share Insights

Key industry participants include Ruchi Soya Industries Ltd., Cofco Agri Ltd., Cargill India, Edible Group, 3F Industries Ltd., Godrej Agrovet, Adani Wilmar Ltd., Troika India, Aditya Engineers, Sundex Process Engineers Pvt. Ltd., Brissun Technology Pvt. Ltd., Tinytech Udyog, Chempro Technovation Pvt. Ltd. and GlamTech Agro Process Pvt. Ltd.

Major companies are enhancing sustainable practices in sourcing, and production by utilizing less land, water, and energy resources. The industry is also witnessing several mergers and acquisitions owing to global manufacturers that are attempting to enter the fast-growing Indian market.

Report Scope

Segments covered in the report

This report forecasts volume & revenue growth and provides an analysis on the industry trends in each of the sub-segments from 2014 to 2025. For the purpose of this study, Grand View Research has segmented the India palm oil market on the basis of product and application:

• Product Outlook (Volume, Metric Tons; Revenue, USD Million; 2014 - 2025)

  • Crude Palm Oil

    • RBD Palm Oil

    • Palm Stearin

    • RBD Palm Olein

    • Crude Palm Olein

  • Palm Kernel

    • Palm Kernel Oil

    • Palm Kernel Cake

• Application Outlook (Volume, Metric Tons; Revenue, USD Million; 2014 - 2025)

  • Edible Oil

  • Cosmetics

  • Bio-diesel

  • Lubricants

  • Surfactants

  • Others