The Vanishing Paper and the Vanishing Farmer: Why India Keeps Missing Its Edible Oil Moment

When Business Standard reported that NITI Aayog had quietly pulled down a working paper urging tariff concessions on U.S. soybean seed and oil, it seemed like routine damage control. But scratch the surface, and it reveals something deeper. It’s a case of one arm of the Indian government urging farmers to shift from rice and wheat to conserve water and boost incomes—while another quietly signals that imported soy oil will always be cheaper. That’s not just mixed messaging. That’s policy incoherence writ large.

What the Missing Paper Really Said

The withdrawn draft, Promoting India–US Agricultural Trade under the New US Trade Regime, proposed three main moves:

• Cut basic customs duty on crude and refined soybean oil.
• Allow duty-free import of U.S. soybean seeds for port-based crushing (oil for domestic use, meal re-exported).
• Present this as a “win–win” to close the trade gap with the U.S., while claiming it wouldn’t harm Indian farmers.

All of it rests on two fragile assumptions: that India’s edible-oil deficit is permanent, and that tariff tweaks are cheaper than fixing domestic supply. The draft itself acknowledged the seeds were genetically modified—still under legal scrutiny—and that by-products might disrupt local crushers, ethanol blenders, and poultry-feed makers.

The $12-Billion Question

India imports over 14 million tonnes of edible oil annually. The bill? Roughly $12–15 billion. That’s money that could have financed seed research, processing infrastructure, and soil rejuvenation—but instead heads to palm estates in Southeast Asia and soy fields in the American Midwest.

Oilseed diversification offers more than economics. It’s a rural transformation in waiting. Diversifying surplus paddy acreage in Punjab and Haryana to mustard or groundnut can conserve groundwater, boost income, and diversify diets. Cottonseed oil—a domestic underdog—can be extracted at scale. Niger and linseed can revive tribal zones. Village-level oil mills can generate local jobs, just as Amul did for dairy.

We’ve done this before. In 1993–94, India met nearly 97% of its edible-oil demand through domestic production. That was no accident—it was the result of the Technology Mission on Oilseeds. But the success was soon reversed.

Déjà Vu in a Drum of Palm Oil

Back in the ’80s, public outrage over animal tallow in soaps led to a palm-oil pivot. Prices briefly dipped, imports surged, and small expeller mills from Kuttanad to Kutch quietly vanished. The result was a dependency trap—and a steady decline in oilseed cultivation and processing.

Now, history repeats. This time, it’s soy, not palm. America, not Malaysia.

Each duty cut sends a message: don’t bother planting mustard or sunflower. Cheaper imports will always undercut you. The domestic oilseed sector—farmers, processors, researchers—suffers not from lack of effort, but lack of policy certainty.

The Price of Further Delay

Every billion spent on edible oil imports is a billion lost to rural jobs, seed science, and Agri-enterprise. It’s money not invested in farmer resilience. Worse, it exposes India to global shocks—as the sunflower-oil squeeze from the Ukraine war showed.

Global soy trade is now a gamble—dependent on weather, freight, and geopolitics. Betting household nutrition on tariff-led imports is less strategy, more roulette.

Two Plans, One Country

To its credit, the government is trying. The National Mission on Edible Oils–Oil Palm (NMEO-OP) targets over ₹11,000 crore toward expanding domestic production. The newer NMEO–Oilseeds aims to boost oilseed output to 70 million tonnes by 2030. States like Telangana and Gujarat are building seed clusters. NAFED is procuring mustard to protect prices.

But these missions are young. Seed supply lags. Procurement is shallow. Farmer trust is fragile.

Proposals like the withdrawn NITI Aayog paper, coming at such a time, risk undercutting this nascent revival. It’s like asking a child learning to walk to stop because a faster buggy has arrived from Iowa.

Make Oil in India—Or Else Someone Else Will

Let’s keep it simple. Launch a “Make (Oil) in India” audit inside NITI Aayog. Any future proposal on agri-trade should first be cross-checked against our own missions. Does it help or hurt NMEO’s goals? Is it aligned with the ₹11,000 crore already committed? Let that reconciliation be made public.

Because if we don’t course-correct now, one set of officials will keep urging diversification while another quietly digs its grave.

And if NITI Aayog continues to outsource food logic to commodity surpluses abroad, then someone in the PMO must remind it: Make in India begins at home. Not in Iowa.