The Indian Vegetable Oil Producers' Association (IVPA), the apex body representing India's vegetable oil refining and processing industry, has called on the Government of India to undertake an urgent policy review following the unprecedented surge in duty-free imports of refined edible oils from Nepal under the South Asian Free Trade Area (SAFTA) framework.
According to IVPA, imports of refined edible oils from Nepal have increased dramatically - from 47,295 metric tonnes (MT) in 2023 to 124,056 MT in 2024, before soaring to more than 804,000 MT in 2025, marking an increase of over 17 times within just two years. If the current trend continues, annual imports could soon approach one million tonnes, making Nepal one of India's largest suppliers of refined edible oils.
The Association said the sharp rise represents a significant structural shift in India's edible oil trade and warrants a comprehensive policy review to ensure that India's trade agreements, tariff policies and domestic value-addition objectives remain aligned.
Sudhakar Desai, President, IVPA, said India remains firmly committed to the objectives of SAFTA and regional economic cooperation. However, he noted that the extraordinary growth in duty-free imports calls for a careful reassessment to ensure that preferential trade arrangements continue to promote genuine regional value addition while protecting the competitiveness of India's domestic refining industry, safeguarding farmer interests and strengthening the country's long-term edible oil security.
India, the world's largest importer of edible oils, relies heavily on imports to bridge the gap between domestic production and consumption. At the same time, successive government policies have encouraged domestic refining to generate value addition, employment, investment and manufacturing within the country.
IVPA argued that the rapid increase in duty-free refined oil imports has disrupted this balance by shifting refining activity outside India. Domestic refiners continue to import crude edible oils after paying applicable customs duties and the Agriculture Infrastructure and Development Cess (AIDC), placing them at a competitive disadvantage. The Association warned that this could adversely impact refining capacity utilisation, future investments, manufacturing competitiveness and demand for domestically produced oilseeds such as soybean and mustard, which support millions of Indian farmers.
The Association also estimated that the growing volume of duty-free imports could result in an annual customs revenue loss of ₹2,000-2,500 crore, while simultaneously transferring value addition and employment opportunities outside India.
To preserve the integrity of India's preferential trade framework, IVPA has urged the government to verify compliance with the Rules of Origin (RoO) under SAFTA through the existing customs mechanism, including the Customs Administration of Rules of Origin under Trade Agreements Rules, 2020 (CAROTAR). Given Nepal's limited domestic production of palm oil and soybean, IVPA believes stricter verification would ensure that preferential tariff benefits are extended only to products genuinely meeting the prescribed origin criteria.
"Our representation is not intended to restrict legitimate bilateral trade with Nepal or dilute India's international commitments," Desai said. "Rather, it seeks to ensure that preferential tariff benefits are granted only to products that genuinely qualify under the Rules of Origin, while maintaining a level playing field for Indian industry and protecting domestic value addition."
IVPA has also urged the government to review the existing tariff structure to ensure continued support for domestic refining and value addition. The Association reiterated that India's long-term edible oil security depends not only on reliable imports but also on a globally competitive domestic refining industry that supports farmers, creates employment, strengthens manufacturing and builds resilient supply chains.