What Happened
- Former Commerce Minister Anand Sharma challenged the current Commerce Minister's narrative on the India-US trade deal, citing historical data to argue that edible oil imports (particularly palm oil) were necessary to meet domestic demand gaps and were maintained across all administrations -- NDA (Vajpayee era), UPA, and the current government.
- Sharma questioned why existing trade agreements with Japan, South Korea, and Malaysia (signed under different governments) have not been revoked if they are deemed against national interests, challenging the government to cancel UPA-era trade pacts if they are considered problematic.
- The government maintained that it has "safeguarded 100%" of agricultural interests and made no concessions on sensitive farm and food products in the India-US deal.
- The debate highlighted broader concerns about the transparency of the interim trade deal's terms, with opposition leaders questioning the implications for national sovereignty and domestic agricultural protection.
- India's structural dependence on edible oil imports (approximately 55-60% of demand met through imports) makes this a persistent policy challenge regardless of the trade partner involved.
Static Topic Bridges
India's Existing FTAs and Their Agricultural Implications
India has operational free trade and preferential trade agreements with over 50 countries. Key agreements that affect agricultural trade include the India-ASEAN FTA (Trade in Goods Agreement, signed 2009, effective 2010), India-Japan CEPA (2011), India-South Korea CEPA (2010), India-Malaysia CECA (within ASEAN framework), and the India-UAE CEPA (2022). Each of these agreements has provisions for agricultural product trade, with India typically maintaining a "sensitive list" of products excluded from tariff liberalization.
- India-ASEAN Trade in Goods Agreement (2010): covers approximately 80% of tariff lines; India has a sensitive track (~489 tariff lines) and a highly sensitive list (~590 tariff lines) including agricultural products
- India-Japan CEPA (2011): India's first bilateral CEPA; covers goods, services, investment; India excluded key agricultural products
- India-South Korea CEPA (2010): India eliminated duties on 74.5% of tariff lines; South Korea on 90%; agricultural sensitivities preserved
- India-UAE CEPA (signed February 18, 2022, effective May 1, 2022): UAE eliminated duties on 97.4% of tariff lines; India on 80% of tariff lines covering 90% of export value
- India-EFTA TEPA (effective October 1, 2025): first trade agreement with a $100 billion investment commitment over 15 years
- India-UK CETA (concluded 2025): 99% of Indian exports get duty-free access; sensitive agricultural products excluded
- India's approach has consistently been to exclude sensitive agricultural products from deep liberalization while opening manufactured goods and services
Connection to this news: The challenge to revoke UPA-era pacts highlights that India's FTA strategy has been bipartisan -- every government has maintained these agreements because they serve broader trade interests, and agricultural sensitive lists provide a buffer for domestic producers.
India's Edible Oil Economy: Production, Imports, and Policy
India is the world's second-largest consumer and largest importer of edible oils. Domestic production meets only approximately 40-45% of demand, creating a structural import dependency that has persisted for decades. The key imported oils are palm oil (from Indonesia and Malaysia), soybean oil (from Argentina, Brazil, and the US), and sunflower oil (from Ukraine and Russia). Government policy oscillates between consumer protection (low import duties to control food inflation) and farmer protection (higher duties to incentivize domestic oilseed cultivation).
- India's edible oil consumption: approximately 25-27 million tonnes annually
- Domestic production: approximately 9.6 million tonnes (2025-26 estimate); imports: approximately 16-17 million tonnes
- Palm oil: approximately 37% of consumption; soybean oil: approximately 20%; mustard: approximately 14%; sunflower: approximately 13%
- Major import sources: Indonesia and Malaysia (palm oil), Argentina and Brazil (soybean oil), Ukraine and Russia (sunflower oil)
- Tariff history: BCD on crude edible oils was reduced to 0% during COVID-19 (2021-22), raised to 20% in September 2024, then reduced to 10% in May 2025
- Current effective duty: crude oils approximately 16.5% (10% BCD + 5% AIDC + SWS); refined oils approximately 35.75%
- National Mission on Edible Oils-Oilseeds (NMEO-OS, October 2024): Rs 10,103 crore, targeting 69.7 MT oilseed production by 2030-31
- National Mission on Edible Oils-Oil Palm (NMEO-OP, August 2021): Rs 11,040 crore, focusing on oil palm in NE India and A&N Islands
- Per capita edible oil consumption: approximately 23.5 kg/year (ICMR-recommended limit: 12 kg/year)
Connection to this news: The debate over the India-US deal's edible oil provisions must be understood against this structural deficit -- regardless of trade partner or political dispensation, India has been unable to eliminate edible oil imports, making this a recurring policy tension between consumer interests and farmer protection.
Trade Policy Instruments: Tariffs, Quantitative Restrictions, and Non-Tariff Barriers
India's trade policy uses multiple instruments to regulate imports: tariffs (ad valorem and specific), quantitative restrictions (QRs, largely eliminated post-WTO accession but some remain for health/security), non-tariff barriers (SPS measures, technical barriers), and trade remedies (anti-dumping duties under Section 9A of the Customs Tariff Act, 1975; countervailing duties under Section 9; safeguard duties under Section 8B). The Foreign Trade (Development and Regulation) Act, 1992 provides the statutory framework for trade regulation, empowering the Central Government to make provisions for development and regulation of foreign trade.
- India eliminated most QRs by April 2001 following WTO Dispute Settlement ruling (DS90: India -- Quantitative Restrictions on Imports, 1999)
- Anti-dumping investigations conducted by the Directorate General of Trade Remedies (DGTR) under the Ministry of Commerce
- Safeguard duties are temporary measures (maximum 4 years, extendable to 8 years) against import surges causing serious injury to domestic industry
- SPS (Sanitary and Phytosanitary) measures under the WTO SPS Agreement: India's food safety standards set by FSSAI (Food Safety and Standards Authority of India, established under the FSS Act, 2006)
- Technical Barriers to Trade (TBT): Indian standards set by BIS (Bureau of Indian Standards, BIS Act, 2016)
- India's "sensitive list" approach in FTAs: excluding approximately 400-600 tariff lines (typically agricultural and dairy products) from tariff reduction commitments
Connection to this news: India's multi-layered trade policy toolkit means that even if tariffs on US edible oils are reduced under the deal, India retains the ability to use SPS standards, quality specifications, and labeling requirements (e.g., GM labeling) as non-tariff barriers to manage import flows.
Key Facts & Data
- India's edible oil import dependency: approximately 55-60% of total consumption
- Edible oil imports: approximately 16-17 million tonnes annually worth approximately Rs 1.61 lakh crore
- Domestic edible oil production: approximately 9.6 million tonnes (2025-26)
- Current BCD on crude edible oils: 10% (effective May 2025); refined oils: 32.5%
- India-ASEAN FTA: sensitive list of approximately 489 tariff lines + highly sensitive list of approximately 590 tariff lines
- India-UAE CEPA: signed February 18, 2022; bilateral trade increased to $84.5 billion in first year
- NMEO-OS budget: Rs 10,103 crore; target: 69.7 MT oilseed production by 2030-31
- NMEO-OP budget: Rs 11,040 crore (launched August 2021)
- India's applied tariff average: approximately 18.3%; WTO bound rates for agricultural products significantly higher
- QRs largely eliminated by April 2001 following WTO DS90 ruling