Edible oil industry body flags trade distortions from surge in imports from Nepal under SAFTA

Lucknow, April 14: The Indian Vegetable Oil Producers' Association (IVPA), an industry body representing India's edible oil refining industry, has submitted a formal representation to the central government departments, highlighting their concerns around the surge in duty-free edible oil imports from Nepal under the South Asian Free Trade Area (SAFTA) framework.

According to IVPA, imports from Nepal rose sharply in early 2025, reaching over 1.80 lakh metric tons between January and March--up from 1.25 lakh tons in the whole of 2024.

IVPA said most of the 1.25 lakh tons of imports in 2024 arrived in India only during the October- December quarter, following a hike in Indian duties, possibly due to the rerouted soya imports to India via Nepal. Under the SAFTA Agreement and the India-Nepal Trade Treaty, vegetable oil imports from Nepal enjoy dutyfree access to the Indian market.

In September 2024, India reportedly imposed a 20 per cent basic customs duty on crude and refined vegetable oils.

"This growth, which is not backed by Nepal's own oilseed production capacity, raises serious questions around the effective enforcement of Rules of Origin and the risk of third-country routing," the edible oil industry body said in a statement Monday.

IVPA believes that the surge in edible oil exports to India from Nepal proves that all exporting countries are routing exports to India through Nepal to avail themselves of the zero-duty benefit.

The Association has noted that this surge is distorting the domestic edible oil market by creating an uneven playing field for Indian processors and refiners, impacting farm-gate oilseed prices and leading to underutilisation of domestic capacity.

Due to the prevailing fear of further zero-duty inflows, market sentiment around oilseed prices has also weakened, resulting in farmers receiving significantly lower prices--despite the sharp increase in import duties and other corrective measures, the industry body said.

"The trend also has broader fiscal implications, including potential loss of revenue and erosion of the intended benefits of duties such as the Agriculture Infrastructure and Development Cess (AIDC)," it added.

Against this backdrop, IVPA has submitted a detailed proposal to the Union agriculture ministry outlining actionable recommendations to ensure that SAFTA provisions are implemented in both letter and spirit, without adversely impacting India's farmers, processors, or its agricultural economic interests.

India is the world's second-largest consumer and number one vegetable oil importer, and it meets 60 per cent of its needs through imports. A large part of this is palm oil and soy oil and their derivatives.

Although oilseed production in India has grown over the years, the production has lagged behind its consumption, resulting in continuous dependence on imports.

Reader Comments

R

Rahul K.

This is concerning for our farmers. If imports keep flooding in duty-free, how will local producers compete? The government needs to act fast to protect domestic agriculture. 🌾

P

Priya M.

Free trade agreements should benefit both sides equally. If Nepal doesn't have the production capacity, where is all this oil coming from? Sounds like loopholes being exploited.

S

Sanjay T.

While I understand the industry's concerns, we should be careful about protectionist measures. Consumers benefit from lower prices due to imports. Maybe the solution is to help our farmers become more competitive?

A

Anjali R.

The numbers speak for themselves - 1.80 lakh metric tons in just 3 months?! That's insane growth. Clearly something fishy going on with the rules of origin. Customs needs to investigate this properly.

V

Vikram S.

Interesting article but could use more context. How much does Nepal normally produce vs what they're exporting to us? Would help readers understand the scale of the issue better.

N

Neha P.

This is why we need stronger "Make in India" policies for agriculture too! 🇮🇳 Can't keep relying on imports while our own farmers struggle. Time to invest in better seeds, tech and processing facilities.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.