This time of the year becomes the time of India's edible oil trade, and it is unfolding again this year and with a bang. According to industry officials, the country will now import palm oil, soyoil and sunflower oil of an average of around 1.5 million tonnes per month from July to October when the domestic crushing activity is expected to decline during the festival season that begins with sweets on Independence Day and continues through Durga Puja, Dussehra, Diwali and beyond. This week, BV Mehta, the president of the Solvent Extractors' Association of India, simply stated that the 2005 oilseed crop has largely finished and the oil that's needed in the kitchen must be imported from a ship and not a local crushing mill.

It is that one sentence that summarizes a structural fault that India has never been able to repair. Total consumption of edible oil in the country is nearly 25 million tonnes per year with only about one-third of it getting cultivated. Two thirds of the oil used in an Indian kitchen has been introduced through an ocean. The ratio has remained unchanged significantly in decades of policy tweaking, raising and lowering the minimum support prices for mustard and soybean, changing duties, oilseed mission after oilseed mission etc. Refiners have little choice but to purchase in bulk from abroad when local supplies are depleted before the new kharif soybean and rabi mustard crops come on board.

This year's build-up is more acrid due to the events of the past few months regarding trade policy. In May 2025, New Delhi lowered the basic duty on crude palm and soybean, sunflower oil imports, bringing the effective rate down to about 16.5 percent, to quell retail prices which had risen by about a third each for palm oil and mustard oil. The tax gap between crude oil and refined oil products has also been increased in recent times, as the government had increased the duty imposed on refined palm, soy and sunflower oil products significantly, leaving crude import duty comparatively light. The motive is to encourage the world to sell India the raw material oil, not the processed product and thereby give jobs to Indian refineries and not to those in Indonesia or Malaysia. Indian Vegetable Oil Producers' Association (IVOPA) member and spokesperson Sudhakar Desai has been claiming for weeks that the crude-refined arbitrage is entering into its positive phase, which is why the pipeline is now filling.

The figures already give part of the picture. Purchases are nearing the one-year high level in July, with palm oil purchases alone surging from June when prices in Malaysia and Indonesia were down. Since 2006, soyoil bookings from Argentina and Brazil have been on parallel tracks.Since 2006, soyoil bookings from Argentina and Brazil have been on parallel tracks. “Not only are they filling up pipelines, the buyers are also creating inventory buffers before the festival as the sweet manufacturers and fried snack sellers are preparing to increase consumption across the country,” says Sandeep Bajoria, a member of the Sunvin Group.

Then there's the geopolitical aspect. Over the past 12 months, India has been diversifying its purchases, placing orders for palm oil with smaller South American and African suppliers as well as the traditional Indonesian and Malaysian suppliers, and also importing soyoils from Russia and Ukraine if the price and freight economics are in its favor. It is partly intended as a cushion against some disruption in the Malacca Strait shipping route or another wave of Indonesian export restrictions, as happened a few years ago to disturb markets and partly opportunistic, betting on whichever source has the lowest landed cost per week.

This is definitely good news for the exporting countries. India is the world's top consumer of vegetable oils, and if its demand increases steadily, it will further deplete stocks that are already being reduced from the tank farms in Indonesia and Malaysia as they have been under pressure from a poor export run in early this year. Malaysian palm oil futures on the Bursa exchange have been trading just above the psychologically significant 4,600 ringgit per tonne mark this week after recent declines in broader commodity futures in the Chinese Dalian Contract Market and oil prices, but buyers have been keen on buying from India to support palm oil prices through September-October.

Arithmetic is more at ease away from home. The weaker rupee against the dollar directly affects the local price of a commodity which is extremely price-sensitive for lower- and middle-income households in the country, as it means that each dollar of imported crude oil is costlier in rupees. The government has demonstrated the past willingness to take swift action when cooking oil inflation is likely to pose a political risk, either by reducing duties on the imports or by issuing duty limit orders or directly appealing to refiners. It's not just weather on the trading desks in Mumbai that will matter for this round of high imports, but how the rupee, freight rates and Southeast Asian harvest weather turn out the next hundred days. The question is not whether any of this is going to increase, but how much. More ships, fuller cargo holds and a larger disconnect between what Indian farms produce and what Indian kitchens actually consume.