India's edible oil prices surge as Indonesia's B50 biofuel mandate tightens supply

The Reserve Bank of India (RBI) flagged a broad-based rise in edible‑oil prices, attributing much of the pressure to the diversion of edible oils into biofuel production. Indonesia has lifted its palm‑oil biodiesel blending requirement from B40 to B50, meaning half of the fuel mix now contains palm‑oil biodiesel. Experts estimate that over 30 % of Indonesia’s palm‑oil output could be redirected to biofuels, cutting the surplus available for export.

India, which imports about 57 % of its cooking‑oil needs, faces tighter global supplies. A concurrent drop in oilseed sowing in India, reported at roughly 26 % below normal, further reduces domestic edible‑oil output. Together, these factors are expected to raise India’s edible‑oil import bill and add pressure to the current‑account balance. The RBI noted that higher edible‑oil prices also affect retail inflation, where oils account for roughly 2.2 % of the consumer‑price index.

Analysts suggest diversifying import sources and boosting domestic oilseed production to lessen vulnerability to such external supply shocks.