Indonesia’s Palm Oil Export Reset Raises Risks for Indian Edible Oil and FMCG Companies

Indonesia’s decision to centralise exports of palm oil, coal and ferroalloys through a state-linked agency has raised concerns across global edible oil markets. President Prabowo Subianto said exports will eventually be routed through PT Danantara Sumber Daya Indonesia to improve transparency, prevent under-invoicing and increase government revenue.

The market’s concern is not about Indonesia running out of palm oil, but about delays, contract renegotiations, shipment approvals and pricing disruptions. Palm oil trade depends heavily on benchmark-linked contracts, shipment timing and quality specifications, so even administrative friction can affect global supply chains.

Indonesia is the world’s largest palm oil exporter, accounting for more than half of global shipments. USDA estimates Indonesia’s 2025-26 palm oil production at 46.7 million metric tonnes, exports at 24 million metric tonnes and domestic consumption at 22.6 million metric tonnes, driven by food and biodiesel demand.

The market was already facing tighter supplies because Indonesia increased biodiesel blending from B35 to B40. AWL Agri Business noted in its FY25 annual report that Indonesia’s biodiesel programme created demand equivalent to nearly 13 million metric tonnes of the country’s 48 million metric tonnes palm oil production.

Why India Is Vulnerable

India remains structurally dependent on edible oil imports. The country consumes around 25-26 million tonnes annually while domestic production is only around 11 million tonnes.

SEA data for November 2025-April 2026 showed India imported 7.82 million tonnes of edible oils, of which palm oil accounted for 3.97 million tonnes, or 51% of imports. Indonesia supplied 1.63 million tonnes while Malaysia supplied 1.52 million tonnes.

India’s Edible Oil Import Mix

Palm oil is critical because it remains cheaper than alternatives. SEA’s May 2026 price snapshot showed crude palm oil C&F Mumbai at US$1,270 per tonne versus crude soybean oil at US$1,298 per tonne and sunflower oil at US$1,405 per tonne.

Palm oil is used not only in cooking oil and vanaspati, but also in bakery fats, biscuits, confectionery, soaps, detergents, cosmetics and oleochemicals. This means the impact extends beyond edible oil companies into FMCG and food-processing sectors.

AWL Agri Business Has the Highest Direct Exposure

AWL Agri Business remains one of the most exposed listed companies. In FY25, it sold 6.57 million metric tonnes of total volumes, including 4.02 million metric tonnes of edible oils. Edible oils generated ₹49,736 crore, accounting for 78% of revenue.

AWL Agri Business FY25

The company said sunflower and palm oils are almost entirely imported, with over 70% of its palm oil sourced from Wilmar International. This makes AWL directly exposed to Indonesian trade disruptions, although Wilmar’s global sourcing network gives it an advantage over smaller refiners.

Patanjali Foods Has Significant Palm Oil Dependence

Patanjali Foods reported FY25 revenue of ₹34,157 crore, EBITDA of ₹2,079 crore and PAT of ₹1,301 crore.

Its edible oils business generated ₹24,785 crore revenue and ₹1,151 crore EBITDA. Palm oil accounted for 28.09% of its edible oil mix, implying palm-linked revenue of roughly ₹6,560-6,960 crore.

Patanjali Foods FY25

Patanjali also has strong backward integration with 6.77 lakh hectares of potential oil palm cultivation and 89,546 hectares already under cultivation involving 63,915 farmers. However, India still depends heavily on imports, limiting the immediate protection from global disruptions.

Gokul Agro Also Faces Exposure

Gokul Agro Resources reported FY25 revenue of ₹19,550.75 crore, EBITDA of ₹562.32 crore and PAT of ₹245.58 crore.

The company manufactures refined palm oil, palmolein oil, vanaspati, frying oils and bakery shortening, making it significantly exposed to palm oil prices, although it does not disclose palm-linked revenue separately.

What Could Happen Next

If Indonesia’s export mechanism slows shipments or alters pricing structures, crude palm oil prices could remain volatile. Higher prices would increase inventory carrying costs and working capital requirements for refiners.

Companies with strong balance sheets and port infrastructure may handle disruptions better than smaller players. Margins will depend on how quickly companies can pass on higher costs to consumers.

Malaysia may gain market share if buyers diversify away from Indonesia, but it may not fully replace Indonesian volumes during tight supply periods.

The impact may also spread to FMCG companies such as Hindustan Unilever, Britannia Industries and Marico through higher palm derivative and oleochemical costs.

Indonesia’s export reset shows that palm oil is no longer just a commodity input. For Indian companies, it has become a policy-sensitive margin variable.