National Mission on Edible Oils – Oil Palm (NMEO-OP) 2025

Policy Update
Atharva Saunke

Background:

India emerged as a net importer of edible oil, with around 57 percent of the total edible oil requirement being met through imports from various countries. To cut down this import dependence and attain self-sufficiency, the Union Cabinet, on August 18, 2021, gave its approval to the launching of the National Mission on Edible Oils Oil Palm.

Being a Centrally Sponsored Scheme, special focus is given to the North East region and Andaman and Nicobar Islands that offer high potential for oil palm cultivation. The scheme envisages a grant of Rs 11,040 crore with Rs 8,844 crore being the Government of India’s share, and Rs 2,196 crore being the State share. It seeks to cover an additional 6.5 Lakh hectares under oil palm by 2025-26, thereby reaching 10 lakh hectares in total.

The NMEO-OP builds on a series of earlier initiatives taken by the Government of India. Oil palm promotion began with the Technology Mission on Oilseeds and Pulses in 1991-92, followed by the Oil Palm Development Programme in the Eighth and Ninth Plans. Subsequent measures included the Integrated Scheme of Oilseeds, Pulses, Oil Palm and Maize during the Tenth and Eleventh Plans, and through the Special Programme on Oil Palm Area Expansion under Rashtriya Krishi Vikas Yojana (RKVY) in 2011-12. Subsequently, the National Mission on Oilseeds and Oil Palm was implemented from 2014-15 with Mini Mission II dedicated to oil palm, later merged in 2018-19 with the National Food Security Mission Oilseeds and Oil Palm.

Functioning:

The National Mission on Edible Oils Oil Palm will operate on two major focus areas: providing price assurance to oil palm farmers and significantly increasing input assistance. Farmers cultivate Fresh Fruit Bunches (FFBs), which are processed by the industry to extract oil. Until now, FFB prices have been linked to fluctuating international crude palm oil prices, exposing farmers to volatility. For the first time, the Government of India will provide a price assurance mechanism through the Viability Price (VP).

The VP will be calculated as the annual average CPO price of the last five years, adjusted with the wholesale price index and multiplied by 14.3 percent, and fixed annually for the oil palm year from 1 November to 31 October.

In addition, a Formula Price (FP), fixed monthly at 14.3 percent of the CPO price, will be used for direct payments. The difference between VP and FP will be paid to farmers as viability gap funding through Direct Benefit Transfer (DBT). Industry is mandated to pay 14.3 percent of Crude Palm Oil (CPO) price, gradually rising to 15.3 percent, with a sunset clause applicable till 1 November 2037. To ensure parity for farmers in the North East and Andaman regions, the Government of India will bear an additional 2 percent of the CPO price, with states adopting this mechanism required to sign MoUs with the Centre.

The second focus area is enhanced assistance for inputs and interventions. Support for planting material has been increased from Rs 12,000 to Rs 29,000 per hectare, while replanting old gardens is incentivised with Rs 250 per plant. Substantial aid is provided for maintenance, intercropping, and rejuvenation.

Seed gardens receive assistance of up to Rs 80 lakh for 15 hectares in the rest of India and Rs 100 lakh for 15 hectares in the North East and Andamans, along with Rs 40-50 lakh for smaller units. Special support for these regions also includes half-moon terrace cultivation, bio-fencing, land clearance, and integrated farming. To attract industry, capital assistance of Rs 5 crore per 5 mt/hr unit, with pro-rata increases for larger capacities, has been provisioned for the North East and Andamans.

The Viability Gap Payment mechanism reduces farmers’ risk by shielding them from international crude palm oil (CPO) price fluctuations and guaranteeing assured returns on Fresh Fruit Bunches (FFBs). At the same time, special focus is given to the Northeast and Andaman regions due to their high cultivation potential and the need to ensure farmer incomes remain at par with the rest of the country despite unique logistical and climatic challenges.

Monitoring of the National Mission on Edible Oils Oil Palm is carried out through three tiers. The General Council consists of the Union Minister of Agriculture and Farmers Welfare. The Executive Council provides coordination and reviews progress for proper implementation. At the state level, the State Level Sanctioning Committee sanctions and monitors projects as per national guidelines.

Performance:

Launched in August 2021, NMEO-OP has boosted oil palm cultivation and domestic crude palm oil (CPO) production. Coverage under oil palm has gone up from 3.70 lakh hectares in 2020-21 to 5.56 lakh hectares as of March 2025, with 1.89 lakh hectares achieved under the Mission alone. As a result, the production of CPO has increased from 1.91 lakh tonnes during 2014-15 to 3.80 lakh tonnes during 2024-25.

To guarantee remunerative returns, the government has introduced a twin-pricing mechanism by way of monthly declared Formula Price by states and an annual fixed Viability Price by the Centre. Farmers are given direct Viability Gap Payments (VGP) [VGP = VP – FP (paid to farmers when FP < VP)] when the Formula Price dips below the Viability Price. This mechanism, with amendments like the rise in viability price from ₹10,516 in October 2022 to ₹13,652 in November 2023, has strengthened farmer confidence in spite of global price volatility.

Infrastructure creation has also been a major success with 111 nurseries yielding 1 crore planting materials and 12 seed gardens yielding 1.2 crore planting materials. Over 17 lakh oil palm saplings were planted across 12,000 hectares in 15 states during the 2024 Mega Plantation Drive, directly benefiting over 10,000 farmers.

Impact:

Though the NMEO-OP has achieved impressive growth in the development of oil palm cultivation to the extent of 5.56 lakh hectares as of March 2025, the above figure indicates only a small part of the total potential that exists in India. As per the evaluation done by ICAR-IIOPR during 2020, the potential area for oil palm cultivation at the state level is calculated as 27.99 lakh hectares across 22 states.

This implies that less than 20 percent of the potential discovered so far has been utilized. The difference between current coverage and potential presents both the opportunities and challenges of the future in becoming self-sufficient in edible oils. Bridging this gap through systematic expansion, improved infrastructure, and farmer participation will be crucial to reduce import dependence and harness the full benefits of NMEO-OP.

Table 1: State-wise Potential Area for Oil Palm Cultivation (ICAR-IIOPR, 2020)

Emerging Issues:

The rate of adoption of oil palm growing is low relative to the huge potential in the country. Lack of awareness among farmers, combined with the lengthy gestation period before oil palm begins producing, deters greater adoption. Volatility in international crude palm oil prices, despite being partially removed by viability gap funding, remains a cause of concern for farmers’ confidence.

Way Forward:

It is recommended that a micro-village level adoption strategy be developed to encourage wider participation and ensure detailed adoption among farmers. Such a strategy would allow tailoring interventions to local conditions, ensuring that village-specific challenges and opportunities are addressed effectively.

It is suggested that a seed subsidy or financial coupon should be provided to first-time adopters to reduce initial costs and promote the popularity of palm oil cultivation. This incentive would serve as a confidence-building measure, encouraging more farmers to take up palm oil and gradually expand cultivation at the grassroots.

References:

1. Ministry of Agriculture & Farmers Welfare, Department of Agriculture & Farmers Welfare. (n.d.). Brief note on oil palm in India: National Mission on Edible Oil. Government of India  https://nmeo.dac.gov.in/NMEOUploadDocuments/BriefNMEOOPRoI_05052022_637873526665916004_OilPalm_India_Brief.pdf
2. Press Information Bureau, Government of India. (2024, March 14). Prime Minister spearheads national mission to attain edible oil self-sufficiency. PIB Delhi. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2014554
3. Press Information Bureau, Government of India. (2021, August 18). Cabinet approves implementation of National Mission on Edible Oils – Oil Palm. PIB Delhi. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1746942
4. Press Information Bureau, Government of India. (2025, July 29). Production of crude palm oil. PIB Delhi. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2149701
5. Press Information Bureau, Government of India. (2024, March 14). Prime Minister spearheads national mission to attain edible oil self-sufficiency. PIB Delhi. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2014554
6. Press Information Bureau, Government of India. (2024, September 7). Over 17 lakh saplings planted during mega oil palm plantation drive 2024 benefiting 10,000 farmers under National Mission on Edible Oil–Oil Palm. PIB Delhi. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2052762
7. Press Information Bureau, Government of India. (2021, November 30). National Edible Oil Mission–Oil Palm. PIB Delhi. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1776581

About the Contributor:

Atharva Salunke is a Policy Research Associate at NITI TANTRA and a Research Intern at IMPRI. He has recently graduated with a Bachelor’s degree in Political Science from Sir Parashurambhau College, Pune.

Acknowledgement: The author extends his sincere gratitude to the IMPRI team and Ms. Aasthaba Jadeja for her invaluable guidance throughout the process.

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.

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