Despite limited production, there is a tremendous increase in the export of edible oils from Nepal
26-May-2025 01:48 PM
Kathmandu. Despite insufficient domestic production of oilseeds to meet its own consumption needs, Nepal continues to export edible oils in large quantities. Most of this export is directed toward India, taking advantage of the South Asian Free Trade Area (SAFTA) agreement, under which there is no customs duty on such exports.
However, there is a clause in the SAFTA treaty stipulating that only domestically produced goods can be exported duty-free. In practice, this clause is being widely violated.
Nepalese exporters are importing crude edible oils from foreign countries, refining them, and re-exporting them to India, which has raised concerns among Indian domestic industries. They argue that this practice is undermining local production and have called for restrictions on such imports.
Among the major edible oils exported from Nepal are soybean oil, sunflower oil, and palm oil—though their production within the country remains minimal.
According to official data, in the first 10 months of the current financial year (till mid-May 2025), edible oil exports to India from Nepal were worth Rs 90 billion (Nepalese currency).
Soybean oil exports surged dramatically—rising nearly 90 times—reaching a volume of 3.74 lakh tonnes and generating revenue of Rs 78.75 billion. During the same period, Nepal imported about 5.40 lakh tonnes of soybean oil worth Rs 81.89 billion, primarily from Argentina, Brazil, China, Iraq, and Thailand, with smaller volumes from Ukraine, Benin, Paraguay, and Togo. A significant portion of this imported oil is refined and re-exported to India.
Similarly, sunflower oil exports rose by 62 percent to 45,776 tonnes, bringing in Rs 10 billion in revenue. In contrast, Nepal imported 1,66,527 tonnes of sunflower oil worth Rs 24.64 billion, mainly from Argentina, Ukraine, and Romania.
Nepal also exported 6,685 tonnes of palm oil worth Rs 1.16 billion during this period, while importing 32,318 tonnes of palm oil valued at Rs 4.60 billion, mostly from Indonesia, Thailand, and Malaysia.
This pattern reflects a growing trend where Nepal acts as a refining and re-export hub for edible oils, exploiting tariff advantages under regional trade agreements.