External Market Linkages and Instability in Indian Edible Oil Economy: Implications for Self-sufficiency Policy in Edible Oils^§

The liberalization of the economy following WTO agreement paved the way for significant changes in the edible oil economy. The paper has shown that the impact of the trade liberalization has led to integration between domestic and international edible oil markets. The consequences of this integration on price stability, and production dynamics have been examined. It has been observed that India has tried to balance the interests of both producers and consumers while fixing the import tariffs. The impact of imposition of tariff analyzed in a partial equilibrium framework has revealed that the net impact will be negative, given the current demand-supply parameters of domestic edible oil economy. The implications of these finding include an increase in research investments in oilseed to reduce the need for protecting domestic sector and to create a buffer stock of edible oils to tide over the short-term international price volatilities