Daybreak - India solved the wrong oil problem first

Episode Date: July 30, 2026

India is the world's top sunflower oil buyer, and Black Sea attacks have sent it hunting across South America. Shipments from Russia and Ukraine are running weeks late, and prices are climbing.The substitutes are squeezed too. Indonesia is diverting more palm oil into biodiesel, and China's record soybean buying keeps the soy complex tight. A weak monsoon has thinned India's harvest. But the country has two oil problems, the crude it burns for fuel and the cooking oil it imports for the kitchen. It threw its capital at the fuel one first, reaching 20% ethanol blending years ahead of target. But feeding those distilleries takes land, and some of that land is coming from oilseeds. So the fix for one oil may gradually worsen the other. Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

This summer, India has been scrambling to secure more cooking oil. Yesterday, Bloomberg reported how the fighting in the Black Sea has disrupted sunflower oil shipments to India. Officials are now looking further afield to Argentina and Australia and other suppliers to keep our imports flowing. Add to that, the weak monsoons that affected oil sea crops in the country itself. This is a crisis that you can see. But there is another force also pushing up the problem.

price of the oil in your kitchen. And it has nothing to do with the war or the weather. Around the world, governments are turning edible oils into fuel, palm oil, soybean oil, rapeseed oil. Instead of ending up in kitchens, they are increasingly ending up in fuel tanks. And the scale is now too big to ignore. A study published this June by Transport and Environment, a Brussels-based Clean Transport Camping Group, estimates global biofuel demand could rise another 30% this year and nearly 70% by 2030. In the United States, a much larger biodiesel mandate has already pushed soybean oil prices sharply. Brazil is steadily increasing its biodiesel blend as well.

Indonesia, the world's largest palm oil producer, also India's biggest source of palm oil, has gone even further with the world's first B-50 mandate. It is pouring its palm oil into its fuel tanks. For countries that grow more edible oil than they consume, this strategy makes sense. But India is a different case. We are the world's largest importer of edible oils. Now, while all of this is happening on one side, the Indian government is also celebrating another milestone.

This year, the country reached 20% ethanol blending in petrol five years ahead of schedule. How this ethanol pushed has been received by the general public, though, is a story that we will say for another day. Now, you might think, what is she even talking about? These two stories have nothing in common. One is about cooking oil, the other is about fuel. But stay with me because they are slowly becoming deeply connected. And it has to do with what India chooses to grow and what it chooses to import.

Welcome to Daybreak, a business podcast from the Ken. I'm your host Nidda Sharma and I don't chase the news cycle. Instead, every day of the week, my colleague Rachel Vargheese and I will come to you with one business story that's worth understanding and worth your time. Today is Friday, the 31st of July. The obvious solution to India's edible oil dependency problem seems pretty simple. Grow more at home. Governments have been trying to do exactly that for decades. Yet, today, India still imports nearly 60% of the edible oil that it consumes.

So, what keeps going wrong? The first problem is where and how we grow these oil seeds. About three-fourth of our country's oil seed cultivation is rain-fed. Most farms are small and many have poor soil. That means every harvest depends heavily on the monsoon. If the rains disappoint, so does the crop. And that vulnerability has actually been on display this year. An uneven monsoon has weighed on oil seed production.

And now, with the conflict in the black seed disrupting sunflower oil shipment, India is once again scrambling for alternative supplies. What I tell you next might actually surprise you. You see, India is not short of land under oilseeds. It accounts for roughly one-fifth of the world's oilseed acreage. And yet, it only produces a tenth of the world's oil seat. So the real problem is productivity. For example, Indian farmers harvest far less soybean per hectare than farmers in Argentina.

Ground nut yields, trail the United States, Even mustard, India's biggest oilseed crop, produces well below the global average. Now, let us add demand to this equation. India's consumption of edible oil is growing roughly 6% every year. Domestic production is growing much more slowly. And this gap has only one way of closing, imports. But you know, it wasn't always this way. In the late 1980s, the Yellow Revolution dramatically boosted domestic oilseed production.

India came close to self-sufficiency. But after the economic liberalization, cheaper palm oil imports from Southeast Asia started flooding the market. Domestic oil seeds became less competitive and investments slowed down. And that is how the import dependence crept back. The government knows the story well. About two years ago, it launched the national mission on edible oil oil seeds with an outlay of more than 10,000 crore rupees. The target is quite ambitious. raise oil seed production from 39 million tons today to nearly 70 million tons by 2030 to 31,

enough to meet around 72% of India's edible oil demand. And this strategy rests on two big bets. The first is productivity, better seeds, better yields, better irrigation, better tech services. In fact, most of the additional production is expected to come from producing more oil from the land that India already cultivates. The second is also expanding cultivation. The mission aims to bring another 40 lakh hectares under oil seeds through intercropping, crop diversification and cultivation on fallow land. Now, on paper, these two goals complement each other.

But in practice, the second one is far more complicated. Because farmers cannot choose crops based on government missions. They choose them based on returns. And today, another national mission is also asking Indian agriculture for more land, more investment and more attention. India's biofuel program. And this is where the edible oil story stops being just about cooking oil and becomes a story about competing national priorities.

Stay tuned. So, India imports two commodities in staggering quantities, crude oil and edible oil, and both expose the country to volatile global markets. They widen our import bill and both also become a political. political headache when prices spike. So, the obvious answer to this is slow down ethanol for fuel and focus on the edible oil part because, well, that is food. But very few in agriculture or energy policy think that this is a viable solution.

Because India's crude oil problem is just as real as its edible oil problem. The country still imports close to 90% of its crude oil and we all saw how exposed we were after the wars in the Middle East and to the sanctions in Russia. So reducing this dependence is a strategic necessity. The government is using ethanol blending exactly for this reason. Ethanol production has risen from 38 crore litres in 2014 to more than 900 crore liters by 2025. But here is the harder question. Can India pursue energy security without making food security harder?

And this is where the debate, becomes more complicated than just fuel versus food. You see, first-generation ethanol, the kind that India mostly produces today, relies heavily on food crops such as sugarcane and increasingly maize. And that shift is beginning to reshape agricultural economics in the country. Recently, reports show that maize acreage has surged while oilseed acreage has declined, partly because ethanol has created a more reliable market for corn. And there is another less obvious effect as well.

Ethanol production creates a byproduct called DDGS, which is a protein-rich animal feed. As DDGS floods the feed market, demand for traditional oilseed meals falls, and this causes oilseed prices to fall further and makes crops like soybean and ground nut less attractive for farmers to grow. In other words, ethanol is changing the economics of what farmers choose to grow. And this is why simply asking farmers. to grow more oil seeds is not enough. The government's national mission on edible oils rightly talks about expanding acreage. But acreage alone will not solve the problem. Like I told you earlier,

India already has one-fifth of the world's land under oil seeds. The bigger challenge is that productivity remains well below global benchmarks. Now, there is another way to reduce this collusion. Move biofuels away from food crops altogether. India has already started down that road through second generation or 2G ethanol, which is made from crop residues such as rice raw, bagasse and other agricultural waste rather than maize or sugar cane. The country's first commercial-scale 2G ethanol refinery at Parnipath has already begun operations. And more such projects have been approved by the government. But progress has been much slower than the first-generation ethanol program,

largely because the technology is way more expensive and the supply chain for collecting agricultural waste is still developing. And this may ultimately be the direction that India has to accelerate towards. Because the real choice is not between food security or energy security. It is actually between using tomorrow's farmland to grow more food or using tomorrow's technology to make more fuel without competing for that farmland in the first place. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full

subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted and produced by my colleagues Niktha Sharma and edited by Rajiv CN.