Palm oil is obtained from fresh fruit bunches (FFB) of oil palm cultivated in plantations. There are several commercial variants of palm oil available viz., Crude Palmoil, Crude Palmolein, RBD (Refined Bleached Deoderised) Palmoil, RBD Palmolien and Palm Kernel Oil. Crude Palmoil when subjected to refining results in the other factions.

Palmoil with an annual production of 25-27 million tons is second most produced oil in the world.

Malaysia (13 million tons) and Indonesia (10 million tons) are the major producers. They together account for 85% of production. Around 80% (21-23 million tons) of global production is exported. Malaysia and Indonesia with 12-12.5 and 6-7 million tons respectively are major exporters. India, China and EU are the major importers.

Price competitiveness has been reason for increased consumption of this oil.

There are several variants of palmoil, viz., crude palmoil, RBD palmoil, RBD palmolein, RBD palm stearin, palm fatty acid distillates and palm kernel oil, which have both edible and non-edible uses.

Bursa Malaysian Derivatives (BMD) is the largest futures market for crude palmoil. Malaysian & Indonesian FOB prices set the mood in the physical market.

India imports roughly 2.5-3.5 million tons of palmoil and its variants a year. The domestic production is very meager at 0.5 lakh tons.

India imposes 65% duty on crude oil and 75% (imposed in 2003-04 Union Budget) on RBD Palmoil. The import ratio is highly dependent on the duty imposed.

In addition to the customs duty, Government of India also imposes tariff value, on which the customs duty is calculated irrespective of the actual price at which the oil is imported.

In 2002-03 India imported 21.5 lakh tons of crude palmoil and 3.15 lakh tons of RBD Palmoil. However, in 2003-04 till July from November '03 India has imported 13.7 lakh tons of crude palmoil and 4.8 lakh tons of RBD Palmoil. Kandla, Mumbai, Kakinada are the major ports for palmoil entry to India and the major trading points too.