On Friday 22 April 2022, Indonesia announced a ban on palm oil exports until further notice. Indonesia accounts for about one-third of all vegetable oil exports and Indonesia is the world’s second-largest palm oil exporter and on the other hand, India is the world’s largest palm oil importer.
India is the world’s largest importer of palm oil and vegetable oil and prices have increased by about 5% to 7% in 10 to 15 days. Palm oil prices have increased by 50% in the last one year and have tripled in the last two years.
India imports around 3.5 million tonnes to 4 million tonnes of palm oil from Indonesia annually while India consumes 22.5 million tonnes of edible oil every year.
Palm oil is used to produce daily consumption products such as soap, shampoo, biscuits, noodles, bread, chocolate, etc.
India imports about 50% of the total palm oil imports from Indonesia while Bangladesh and Pakistan import 80% of palm oil from Indonesia.
In such a situation, the export ban of Indonesia is increasing the prices of palm oil, which can adversely impact the margins of Indian FMCG stocks like Hindustan Unilever, Nestle India, Dabur, ITC, Britannia Industries, Parle, etc.
Due to all these reasons, the import bill of India is rising further, and inflation is also increasing rapidly so that the consumer will now have to spend more on the same product.