India to be Impacted by Increased Use of Palm Oil in Biodiesel Production
08-May-2026 08:49 PM
Mumbai. The top three palm oil-producing nations—Indonesia, Malaysia, and Thailand—are formulating plans to increase the utilization of this vital vegetable oil in the production of biodiesel.
The Indonesian government has already announced this initiative. Currently, a mandate requiring a 40 percent blend of palm oil in biodiesel production is in force there; however, effective July 1, 2026, this level is set to rise to 50 percent. This implies that, starting in July, the biofuel produced in Indonesia will consist of a blend comprising 50 percent diesel and 50 percent palm oil. Indonesia stands as the world's leading producer and exporter of palm oil, and it is from this country that India imports the largest volume of palm oil.
Should the consumption of palm oil in biodiesel production rise rapidly, the stock available for food-related purposes within Indonesia could diminish. This, in turn, could lead to a decline in exports and a potential surge in prices. Preliminary indications of this trend have already begun to emerge.
Futures prices for benchmark crude palm oil are trending upward and gaining momentum, a development that has already triggered price hikes in both Indonesia and Thailand. Meanwhile, a bullish and firm sentiment also prevails in the global market for soybean and sunflower oils.
In Malaysia, palm oil currently accounts for 12 percent of the blend used in biodiesel production; this proportion is expected to be raised to 15 percent in the near future. Over time, this blending ratio could be gradually increased to reach as high as 50 percent. Such a move could have a profoundly adverse impact on Malaysia's palm oil exports and exacerbate difficulties for India, given that the country imports substantial quantities of palm oil from Malaysia as well.
Similarly, in recent years, Thailand has also emerged as a significant supplier of palm oil to India. The Thai government, too, is currently considering increasing the proportion of palm oil used in its biodiesel production. Furthermore, the ongoing crisis in West Asia is disrupting the trade of crude mineral oil, leading to a rise in prices. India remains the world's largest importer of palm oil.