Executive Summary:

 

Policy Adjustments Boost Import Dynamics

In a bid to curb food inflation and ensure steady supplies for downstream industries, India implemented significant tariff reductions on edible oils earlier this year. The basic customs duty on crude palm oil, a primary raw material for producing stearic acid and other oleochemicals, was halved to 10 percent effective May 30, 2025, and extended through March 2026. This policy aligns with broader efforts to enhance affordability for manufacturers in cosmetics, pharmaceuticals, and personal care, where stearic acid serves as an essential emulsifier and thickener.

 

Although no specific duty cuts were announced for stearic acid itself, which remains at a 7.5 percent import tariff, the changes in palm oil duties have indirectly benefited the oleochemical sector by lowering feedstock costs. Palm oil imports from Indonesia are forecasted to exceed five million tons in 2025, up from previous years, thanks to these adjustments and strengthened trade agreements. In July 2025, while palm oil shipments dipped slightly due to competition from surging soyoil imports, stearic acid prices stabilized around USD 1,350 per metric ton in India, following a four-month decline from INR 135 per kilogram in March to INR 111 per kilogram by mid-year. Importers have responded by focusing on long-term contracts to hedge against potential volatility, particularly as global supply chains adjust to weather-related disruptions in Southeast Asia.

 

Key Suppliers and Trade Patterns

India ranks as the sixth-largest importer of stearic acid globally, with inbound shipments totaling around USD 708 million in 2023. Domestic production meets only about 13 to 16 percent of consumption, making the country heavily reliant on foreign sources. Southeast Asia dominates this supply landscape, with Vietnam, Indonesia, and Malaysia collectively providing over 70 percent of imports. Vietnam leads in shipment volume, contributing roughly 30 to 35 percent, while Indonesia excels in value terms, exporting significant quantities derived from its vast palm oil industry.

 

In 2023, India's stearic acid imports from Indonesia were part of broader palm derivative trade, supporting key industries. Malaysia follows closely, with its share rising to 35 percent of India's palm oil imports in the first half of 2025, fueled by competitive pricing and duty reductions. On the export side, India plays a dual role, shipping USD 370 million worth of stearic acid in 2023, marking a notable increase from prior years and positioning the country as one of the top global exporters. Major destinations include the United States, Germany, and the Netherlands, where Indian products are valued for quality and cost-effectiveness. This export growth, around 10 to 15 percent year-over-year in shipments, underscores India's evolving position in the global value chain.

 

Market Growth and Future Outlook

 

Looking ahead, India's oleochemical market, including stearic acid, is set for steady expansion. Valued at USD 1.13 billion in 2024, the sector could double to USD 2.2 billion by 2033, growing at over 7 percent annually, driven by rising demand in personal care and industrial applications. Globally, the stearic acid market aligns with this trajectory, with demand projected to increase at 5.36 percent through 2030, supported by sustainable sourcing trends and bio-based innovations.

 

Challenges remain, such as potential U.S. tariffs on Indian goods effective August 2025, which could impact exports, and domestic calls for anti-dumping measures on certain chemicals. However, with policy stability and robust trade partnerships, India's oleochemical manufacturers are well-equipped to capitalize on opportunities. As the cosmetics and plastics sectors expand, strategic imports and local production enhancements will be key to sustaining growth in this vital industry.