Demand in Nepal to Reduce Import Duty on Sunflower Oil

Kathmandu. Following the Indian government's decision to cut import duty rates on crude and refined sunflower oil by 10 percentage points, Nepal's industrial and trade sectors have begun demanding a reduction in customs duties on the import of this key edible oil. They argue that since the import of crude sunflower oil has been made duty-free in India, there could be massive imports into that country, followed by smuggling into Nepal. This would adversely affect the interests of Nepali refineries.

It is worth noting that Nepal imposes a 10% import duty and a 13% VAT on crude sunflower oil, whereas India levies a 5% GST on it. If crude sunflower oil is smuggled from India into Nepal via border roads, certain refiners might benefit, but those who legally import the oil from abroad—paying the 10% duty—would suffer losses.

The Chairman of the Morang-based Edible Oil Business and Industry Organization states that if sunflower oil is smuggled into Nepal from India without a corresponding reduction in import duties, it will become difficult for the Nepali industry to compete with India. Sunflower oil prices in India are expected to drop by up to ₹10 per liter. Like India, Nepal imports crude sunflower oil from Russia, Ukraine, and Argentina at similar price points and subsequently processes it for export as refined sunflower oil to India.