Edible oil industry urges PM Modi to curb duty-free imports from Nepal

The Indian edible oil industry has expressed concern over a sharp surge in duty-free imports of refined soybean and palm oil from Nepal, alleging that these imports are bypassing trade rules and severely impacting domestic refiners, farmers, and India's interests. 

In a letter addressed to Prime Minister Narendra Modi and cabinet ministers, the Solvent Extractors’ Association of India (SEA) has urged immediate intervention to regulate the massive influx of cheaper edible oils from Nepal under the South Asian Free Trade Area (SAFTA) agreement.

SEA alleged that these imports of refined soybean and palm oil from Nepal are violating rules of origin, seriously harming domestic refiners and farmers while causing significant revenue losses for the government. Due to the duty advantage, at least 50,000 to 60,000 tonnes of refined oil per month are expected to flow from Nepal to India.

SEA has urged the government to implement a Minimum Import Price (MIP) for edible oils imported from SAFTA countries. It emphasized that the MIP should be set at or above the cost of oil produced from domestically grown oilseeds, based on the Minimum Support Price (MSP) in India.

Sharp Rise in Imports

Data highlights a drastic increase in Nepal’s exports of edible oil to India. Exports surged from just 687 metric tonnes (MT) in July-August 2024 to a staggering 56,444 MT between December 15, 2024, and January 15, 2025. Monthly figures indicate a steady rise—2,240 MT in August-September, 6,765 MT in September-October, 18,165 MT in October-November, and 32,816 MT in November-December.

Industry experts allege that Nepal-based traders are importing crude edible oils from countries such as Malaysia, Indonesia, Argentina, and Brazil, refining them, and then re-exporting them to India under SAFTA, thereby avoiding normal import duties.

Industry Concerns

"The import of edible oil at nil duty under the SAFTA agreement from Nepal is creating havoc not only in Northern and Eastern India but has now also spread to Southern and Central India," SEA President Sanjeev Asthana stated in the letter. The industry body claims that duty-free imports are distorting domestic prices and undermining the high import duties imposed by the Indian government to protect local farmers and refiners.

Alarming Trade Disparity

Trade data from October 15, 2024, to January 15, 2025, reveals a significant imbalance: while Nepal imported 1,94,974 MT of edible oil (mostly crude soybean and sunflower oil), it exported 1,07,425 MT to India within the same period. Notably, Nepal’s own monthly edible oil requirement stands at approximately 35,000 MT, indicating large-scale re-exports.

“What started as a trickle has now assumed alarming proportions, threatening not just refiners but also leading to huge revenue losses for the Indian government,” Asthana emphasised. “The purpose of maintaining high import duties on edible oils is being completely negated.”