Indonesia, the world's top palm oil producer, is poised to export over 5 million tonnes of palm oil to India in 2025, marking a significant uptick in bilateral trade. Amid growing demand from India’s food and FMCG sectors, Indonesian exporters are gearing up to capitalize on favourable market conditions and tariff advantages. The rise in exports reflects deepening economic ties between the two countries and highlights Indonesia’s strategic push to expand its share in the Indian edible oil market amid intensifying regional competition from Malaysia.
Strengthening Trade Ties in the Edible Oil Sector
Indonesia’s palm oil exports to India are projected to exceed 5 million tonnes in 2025, signaling a strong recovery and expansion following a period of volatility in global edible oil markets. With India being the largest importer of palm oil globally, its increasing reliance on Indonesian crude palm oil (CPO) underscores the resilience and importance of this bilateral trade corridor.
This anticipated surge in shipments follows a series of structural adjustments, including improved plantation output in Indonesia, stabilized domestic policies, and reduced export levies. Industry insiders note that Indian refiners and FMCG companies are showing a renewed appetite for long-term procurement agreements to hedge against supply shocks and price swings.
Competitive Pricing and Tariff Advantages Drive Growth
Indonesia holds a competitive edge in the Indian market, particularly due to its favourable export duty structure compared to Malaysia, its primary regional rival. As of mid-2025, Indonesia has maintained a steady export tax on CPO at around $33 per tonne, along with a levy of $85 per tonne. These figures are expected to stay relatively stable, keeping the landed cost of Indonesian palm oil in India lower than that of Malaysian supplies.
Additionally, India imposes a 5.5% import duty on CPO, creating room for margin optimization for Indian refiners when sourcing from Indonesia. As a result, refiners have increasingly shifted their procurement strategy towards Indonesian suppliers to maximize cost-efficiency and ensure uninterrupted supply.
Domestic Demand in India Fuels Import Appetite
India’s domestic demand for palm oil continues to rise, fueled by robust growth in the packaged food, hospitality, and personal care sectors. The upcoming festive season is also expected to spike consumption, pushing refiners to secure inventories in advance. The Indian government's decision to maintain lower import duties through at least the end of 2025 further supports the import momentum.
Palm oil, being cost-effective and versatile, remains a staple in Indian households and commercial kitchens alike. This demand, coupled with Indonesia’s aggressive export strategy, is expected to keep palm oil shipments buoyant well into the next fiscal year.
Indonesia’s Strategic Positioning
For Indonesia, expanding its palm oil exports to India aligns with its broader trade and agricultural policy objectives. The country is actively seeking to diversify its export markets and reduce dependency on China and the European Union, where environmental regulations and deforestation-linked concerns have posed challenges.
India offers a dependable and growing market, with fewer regulatory hurdles and a strong appetite for affordable edible oils. Indonesian officials have been engaging in regular trade dialogues with their Indian counterparts to streamline logistics, resolve non-tariff barriers, and ensure steady flow of commodities.
Outlook: A Win-Win Trade Equation
With stable pricing, predictable tax structures, and growing mutual trust, palm oil trade between Indonesia and India is entering a phase of sustained growth. Exporters in Jakarta are confident of meeting the 5-million-tonne target by year-end, while Indian buyers benefit from improved supply chain certainty and competitive import pricing.
As both countries strengthen their economic alignment in agriculture and trade, palm oil emerges not only as a commodity of strategic importance but also as a symbol of evolving regional interdependence in Asia.
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