India Achieves 47% of Targeted Area for Oil Palm Expansion in Current Fiscal

India has achieved 47 percent of the area targeted for oil palm coverage in the current fiscal year, according to official data. The government remains hopeful of meeting the overall target of 1.19 lakh hectares (lh) fixed for 2026-27, supported by Bihar joining the National Mission on Edible Oil - Oil Palm (NMEO-OP).

Out of 55,614 hectares covered under oil palm this fiscal year, six states in the north-east region account for 23,347 hectares. These states include Arunachal Pradesh, Assam, Manipur, Mizoram, Nagaland, and Tripura. Nine other states account for 32,267 hectares, led by Telangana with 14,919 hectares, Andhra Pradesh with 12,652 hectares, Odisha with 2,119 hectares, and Chhattisgarh with 1,465 hectares.

The centrally-sponsored NMEO-OP scheme was launched in August 2021. It aims to raise crude palm oil production to 11.20 lakh tonnes by 2025-26 by bringing an additional area of 1.79 lh in north-eastern states and 4.85 lh in nine other states by the end of FY26. The scheme is implemented with a funding ratio of 60:40 between the central and state governments for general states, and 90:10 for north-eastern states.

Latest data shows that against ₹757.62 crore allocated for this year under the scheme, the Centre has released ₹583.23 crore to states. However, utilisation has been less than 40 percent of the released amount so far. States like Andhra Pradesh, Kerala, Nagaland, and Mizoram have spent over 50 percent of their respective releases. Conversely, Gujarat has utilised 6 percent, Odisha 15 percent, Chhattisgarh 22 percent, and Assam and Manipur 24 percent each.

In the north-eastern states, 23,347 hectares have been covered against the targeted 36,319 hectares, representing 64 percent of the target. Other states have covered 32,267 hectares, which is 39 percent of the targeted 82,959 hectares. Bihar has agreed to cover 200 hectares after deciding to implement the scheme this fiscal.

Before the NMEO-OP was launched, India had a 3.67 lh area under oil palm. Over the last five years, out of a 6.5 lh target, 2.73 lh has been added. With the latest additions, the total area under oil palm has reached 6.96 lh, which includes 3.28 lh under NMEO-OP.

Sunil Kataria, MD & CEO of Godrej Agrovet, noted that Andhra Pradesh and Telangana continue to lead, while newer geographies emerge as important growth centres. He highlighted that Fresh Fruit Bunch (FFB) prices have increased from around ₹12,500 per tonne in 2023 to nearly ₹20,000 per tonne today, improving farm-level returns.

The NMEO-OP scheme includes a Viability Gap Payment (VGP) provision. The government pays the differential amount directly to farmers via Direct Benefit Transfer (DBT) when the industry's payable price falls below the government-set minimum assured price. The mission also offers special assistance of ₹1,00,000 per hectare to farmers in the north-east region for planting material and land management, alongside ₹2,90,000 for purchasing harvesting tools.

Kataria pointed out that a key challenge remains the three-to-four-year gestation period before commercial yields begin. Intercropping short-duration crops like vegetables, pulses, and turmeric can help farmers generate interim income. He added that synchronised growth across the value chain, including the expansion of processing mills and collection centres, is critical since harvested FFBs need to be processed within 24 hours.

"The expansion of India's oil palm mission highlights the importance of steady execution and financial support systems in the agricultural sector. Bridging the gap between fund allocation and actual utilisation at the state level is essential for long-term project viability. Furthermore, addressing gestation periods through intercropping and strengthening supply chain infrastructure like local processing mills will be critical for sustaining farmer participation and achieving national self-reliance goals in edible oils." — Dr. Shishir Gupta, Founder & CEO, StartupLanes