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Cabinet approves ₹11,040 crore scheme to reduce edible oil import dependency

By Priyanka Verma 
Updated Date

NEW DELHI: To reduce India’s reliance on imported edible oil, the Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved the launch of a new mission to boost palm oil production–National Mission on Edible Oils – Oil Palm (NMEO-OP)–with an outlay of Rs11,040 crore. The central scheme will have a special focus on the north-eastern region and the Andaman and Nicobar Islands.

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“Due to the heavy dependence on imports for edible oils, it is important to make efforts for increasing the domestic production of edible oils in which increasing area and productivity of oil palm plays an important part,” the cabinet secretariat said in a press statement.

For the new scheme, the Centre will contribute Rs8,844 crore while states have to contribute Rs2,196 crore including the viability gap funding.

The new scheme aims to have an additional area of 6.5 lakh hectare under oil palm by FY26, reaching the target of 10 lakh hectare. As a result, crude palm oil (CPO) is expected to touch 11.20 lakh tonne by FY26 and 28 lakh tonne by FY30.

“The scheme will immensely benefit the oil palm farmers, increase capital investment, create employment generation, shall reduce the import dependence and also increase the income of the farmers,” the press statement said.

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Pl palm farmers produce fresh fruit bunches (FFBs) from which oil is extracted by the industry. At present, prices of these FFBs are linked to international CPO prices and thus tend to fluctuate.

For the first time, the government will provide a price assurance to oil palm farmers for their produce. This will be known as the Viability Price (VP). This will protect farmers from global market fluctuations and volatility.

“This VP shall be the annual average CPO price of the last 5 years adjusted with the wholesale price index to be multiplied by 14.3 %. This will be fixed yearly for the oil palm year from 1 November to 31 October. This assurance will inculcate confidence in the Indian oil palm farmers to go for increased area and thereby more production of palm oil. A Formula price (FP) will also be fixed which will be 14.3% of CPO and will be fixed on a monthly basis. The viability gap funding will be the VP-FP and if the need arises, it would be paid directly to the farmers accounts in the form of DBT,” the press statement said.

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