Packaged food giants Nestle and PepsiCo are in discussions with Godrej Agrovet, one of India’s leading palm oil producers, to source refined palm oil locally for their popular brands like Maggi and Lay’s, according to executives familiar with the matter.
The move comes as multinationals look to mitigate rising global prices and logistical challenges by sourcing locally. With heightened scrutiny on edible oil quality from the Food Safety & Standards Authority of India (FSSAI) and ongoing geopolitical tensions, Nestle and PepsiCo aim to shorten their import cycles and secure a stable supply chain.
Traditionally, both companies have relied on palm oil imports from Indonesia and Malaysia for their Indian operations. However, the current scenario has prompted their parent companies to push for increased local procurement.
“Packaged food MNCs are in talks with us to source refined palm oil, or palmolein, and deals are expected to be finalized within a year,” said Sougata Niyogi, CEO of Godrej Agrovet’s palm oil business. While declining to name the companies involved, Niyogi confirmed that discussions are in the early stages.
Palm oil is a key ingredient in many packaged foods, including noodles, chips, biscuits, and chocolates. It is favoured for its lower cost compared to alternatives like sunflower or soybean oil. However, the sector is under growing pressure to adopt healthier palm oil variants.
Trade experts suggest that sourcing from India could allow these companies to negotiate better prices, particularly as global palm oil prices have surged in recent months due to increased demand and the rise of palm oil usage in biofuels. As of August, the imported price of palm oil had risen to $990 per tonne, up from $960 per tonne in July.
India imports approximately 8.5–9 million tonnes of palm oil annually from Malaysia and Indonesia. Sandeep Bajoria, CEO of Sunvin Group, an oil trading firm, highlighted the benefits of local sourcing, including quicker access to small quantities, better quality control, and reduced logistics costs amid ongoing geopolitical tensions.
As the largest importer of edible oil globally, India’s domestic sourcing strategy by major food companies like Nestle and PepsiCo could signal a significant shift in the industry.