Oiling point: How India went from Dhara to edible oil import dependence

One thing that all of these sweets and savouries have in common is that they are all deep-fried in oil that is used again and again. And again. With millions consuming these tasty but transfat-laden, artery-clogging foods day after day, it is not surprising that India loses nearly 3 million lives a year to cardiovascular disease, leading some to call it the heart attack capital of the world.

Speaking in Hyderabad earlier this month, Prime Minister Narendra Modi urged people to reduce their cooking oil intake by 10%, for the sake of their health. He was also worried about the country’s fiscal health, and prodded Indians to lower consumption of fuel and gold as well. The PM’s appeal was understandable, coming as it did on the back of the war in West Asia, which has choked global energy supplies, widened India’s current account deficit and pushed the rupee off a cliff.

But, while they will suffer through fuel price hikes, taking a bus or cycling or walking if necessary, most Indians are not quite ready to curb their dietary cravings, particularly the oily kind. And that is bad news for the fisc, because India depends on imports for 60% of its cooking oil requirements. Indeed, it is the largest importer of edible oils globally.

The numbers show just how big that dependence is in absolute terms. The country imports 16 million tonnes of its annual edible oil consumption of 26–26.5 million tonnes, according to the Solvent Extractors’ Association of India. In the year to 31 March, India spent about ₹1.72 trillion to import cooking oils. This is higher than the Union government’s annual budget for the entire farm sector ( ₹1.59 trillion in fiscal year 2026, or FY26). Not only that, the cooking oil import bill for FY26 was 17% higher than in FY25.

Atul Chaturvedi, chairman of the Asian Palm Oil Alliance and former chief executive officer (CEO) of AWL Agri Business Ltd (formerly Adani Wilmar), which owns the Fortune cooking oil brand, believes that due to higher international prices and currency depreciation, India’s edible oil import bill will certainly cross ₹2 trillion in FY27. That would be a record. This is despite a moderation in demand due to an intense summer, surging retail prices and lower demand from hotel, restaurants and roadside vendors (who are battling higher prices and cooking gas shortages).

Households hit hardest

International prices of edible oil have shot up in recent months—they were up 23% on-year in April, per a United Nations agency—on the back of higher prices of palm and soy oil, with major producer Indonesia diverting supplies to make biodiesel in an effort to mitigate the spike in global crude prices. The indirect impact of the spike in crude oil prices has also played a role, with freight and insurance costs surging since the Iran war began, increasing the landed price of commodities.

Together, these factors have pushed India’s import bill and domestic prices up. This imported inflation in the food basket comes with the risk of a further spike if monsoon rains turn out to be poor, as forecast by the India Meteorological Department, affecting oilseed output.

In addition, families have had to bear the brunt of the rupee’s depreciation—about 11% to a dollar in FY26. Meaning, consumers are paying that much more to buy a litre of oil in rupee terms. Unlike imported fertilizers and crude oil, where domestic prices are regulated and subsidized, shielding consumers and farmers from price spikes, households bear the entire burden of any global surge in cooking oil prices. Data from the consumer affairs department show that retail cooking oil prices are 7-15% higher year-on-year, as of 25 May.

Oil prices may soften a bit once the war ends but the era of cheap oils, at ₹120 per litre or less, is history, warns Chaturvedi. Currently, retail consumer prices range between ₹145 and ₹200 per litre depending on the variety one buys.

In a sense, India’s dependence on imported cooking oil has become ingrained, with domestic production neglected for decades in the face of surging demand, say experts, instead of meeting the country’s needs almost fully, as it once did.

The Dhara ascendancy

It may seem like a tall tale, but there was actually a brief period not so long ago, in the early 1990s, when the country almost achieved self-sufficiency in edible oil. How it was able to achieve that distinction, only to see it all unravel, is a tale worthy of a Bollywood saga, complete with triumph, heroes cavorting in sunflower and mustard fields, and tragedy.

The story begins in the early 1970s. The India-Pakistan war in 1971 and a drought in 1972 led to a surge in prices of essentials, including milk, ghee and cooking oils, writes B.M. Vyas, former managing director of the Gujarat Cooperative Milk Marketing Federation, which markets its products under the Amul brand, in his 2025 book Tryst with Marketing: Untold Story of India’s Biggest Dairy Success.

The fats shortfall created a market for vanaspati (popularly sold under the Dalda brand), a cheap hydrogenated oil made using imported palm oil. The rise of cheap vanaspati hurt domestic growers of mustard and groundnut. Production stagnated while demand kept on increasing with the population rise.

On the political front, food inflation led to discontent, including student protests against a hike in mess bills, sparking the Navnirman protest movement in Gujarat. With Jayaprakash Narayan launching a crusade against corruption and a backlash against Indira Gandhi’s declaration of an emergency, the ruling Congress party lost the 1977 election and the newly formed Janata Party came to power.

H.M. Patel, who was the finance minister in the Janata Party government, was from Anand, Gujarat, the hub of India’s dairy revolution. Patel requested the legendary Verghese Kurien, who crafted the Amul cooperative dairy model, to do something similar with oilseeds. The goal was to achieve self-reliance with indigenous oils while providing profitable prices to domestic growers.

Thus was born Operation Golden Flow, with its oil cooperatives. A decade later, in 1988 it culminated in the launch of Dhara, a brand created under the National Dairy Development Board (NDDB) to market the produce of Indian oilseed farmers. A couple of years earlier, India had also launched the first technology mission in oilseeds.

By 1991, the two initiatives led to a sizeable increase in planting area and an 80% increase in production (compared with the average production between 1970 and1985). Dhara was a runaway success, helping India achieve self-sufficiency in edible oils, and displacing privately owned oil brands.

After the economy was liberalized in 1991, India joined the World Trade Organization and opened up import of edible oils. Homegrown oils started losing out to cheaper imports. By 1998, India was again importing 30% of its demand.

“The oil lobbies of other countries were unhappy (since imports fell sharply)… We took care of the telia rajahs (oil traders) but we did pay a heavy price,” wrote Kurien in his autobiography I Too Had a Dream. Officials working for NDDB were physically assaulted and its cooperative oil mill in Bhavnagar, Gujarat, was repeatedly set on fire. “The scoundrels, who for decades exploited both farmers and consumers, were waiting eagerly for our edible oil project to fail,” Kurien wrote.

Then, a final blow landed. In August 1998, the national capital suffered a tragedy as 60 people died and thousands fell ill after consuming food cooked with adulterated oil. Mustard oil contaminated with argemone, a weed seed, was blamed for the tragedy. Domestic brands that sold mustard oil, including Dhara, lost the trust of consumers.

Recounts Vyas, writing: “Consumers turned to ‘purer’, odorless, colourless, and tasteless oils, or what we referred to as solvent-extracted refined oils.” Citing industry experts, he opined that imports were deliberately being promoted to the detriment of indigenous edible oils. Indeed, by 2018, India was importing 70% of its demand.

Towards atmanirbharta

India could meet its requirements in the early 1990s because per capita oil consumption was low. In 1980-81, an average Indian consumed less than 4kg of oil in a year. By 2021-22, this had dramatically risen to nearly 20kg, as per data cited in a Niti Aayog report on edible oils (2024). The surge in demand was a result of population and income growth, and growing consumption of fat-rich ultra-processed foods.

Around 2010, India had to make a difficult choice. “It prioritized production of pulses over oilseeds, because there was an international supply line for cheap oils but not for pulses,” says T. Nanda Kumar, former food and agriculture secretary to the Union government.

So, can India ever be atmanirbhar (self-sufficient) again? A national mission on edible oils aims to cut import dependency from the current 60% level to less than 30% by 2030-31. Another mission on oil palm is on as well. But experts suggest that unless domestic yields improve significantly, atmanirbharta will be an elusive pursuit.

Kumar says that increasing the area under oilseeds is not practically feasible (as that may hurt pulses, which already face a supply shortfall). He believes India can reduce its dependence on imports via productivity gains (by producing more per unit of land). But, in his view, the way to do this is by investing in research and promoting varieties where oil recovery from seeds is higher than current levels. This will not make the country self-sufficient in cooking oils, but it could reduce import dependence to 40% of domestic demand, in his view.

Currently, oilseeds are mostly grown by small farmers, who lack access to irrigation, in marginal soils, leading to poor yields. For instance, soybean yields are a third compared to major global exporters.

“Lack of access to genetically modified (GM or transgenic) technology, which can improve yields, is the primary cause behind this chronic dependence,” opines Ramesh Chand, farm economist and former member of the federal thinktank Niti Aayog. India continues to import GM-origin soy oils from the US, Brazil and Argentina but does not allow its farmers to grow transgenic food crops.

In 2022, the government allowed the environmental release (for seed production and eventual commercial cultivation) of a GM mustard variant developed indigenously. But the decision is currently under review in the Supreme Court.

Without GM technology, India cannot ever get to self-sufficiency, concurs the Asian Palm Oil Alliance’s Chaturvedi. “We are not even trying seriously,” he warns.

To be sure, it’s not just about access to technology; if atmanirbharta is to become a reality, farmers will first need to go against the grain—literally, in some cases—and take an interest in planting oilseeds. And they will need some form of price support and trade protection in the form of higher import duties. But interest is lukewarm.

“Over a decade, I slashed my mustard planting area to a third (from 48 acres to 16 acres). There are no assured prices for oilseed farmers and wholesale prices often crash due to cheaper imports,” says Harman Brar, a farmer from Sri Ganganagar district in Rajasthan. Brar switched from mustard to orange orchards, where returns are 2-3 times higher.

“Because mustard oil prices have shot up now, farmers may increase the area under the oilseed. But they will move away when prices drop and India’s dependence on imports will continue,” Brar says.

Farmers in states such as Madhya Pradesh are also moving away from low-productivity soy to more profitable crops such as maize and rice. That’s because India is using these cereals to make ethanol to blend with petrol in an effort to reduce its reliance on imported crude.

Ironically, like a zero sum game, this may end up deepening India's chronic dependence on imported cooking oils for all things gastronomic. The dark lining: if Indians did not have the unhealthy habit of reusing oil, the import bill would be astronomic.