Import of Nepalese refined edible oil likely to decrease due to increase in difference in customs duty

18-Jun-2025 05:18 PM

Mumbai. Import of refined edible oils from Nepal to India is expected to decline significantly as the gap between import duties on refined and crude edible oils has widened. On May 30, the Central Government reduced the import duty on crude palm oil,

soybean oil, and sunflower oil from 20 percent to 10 percent, bringing the total effective customs duty down from 27.5 percent to 16.5 percent. However, the import duty on refined edible oils remained unchanged at 35.75 percent.

This decision is expected to benefit Indian refiners and consumers. Refiners are likely to see improved margins, while consumers may enjoy lower retail prices for edible oils. As a result, the overall import of refined edible oils into India is likely to decrease.

According to Rahul Chauhan, director of agri commodity research firm iGrain India, imports of refined edible oil from Nepal could fall by more than 30 percent. Nepal has been exporting refined edible oils to India without duty under the South Asia Free Trade Area (SAFTA) agreement, making its oils more competitive.

However, with crude oils now being imported at significantly lower duties and refined domestically at competitive prices, Nepalese exporters may lose their price advantage, and Indian importers may reduce purchases.

Previously, the duty difference between crude and refined edible oils was 8.25 percent; it has now widened to 19.25 percent.

Following the duty cut, prices of edible oils in India dropped by ₹80–90 per 10 kg, though rising global prices have since reversed the trend somewhat. A slight price correction may occur in the coming months.

Imports from Nepal are likely to decrease during July–August, though a complete halt appears unlikely. Under SAARC trade agreements, member countries can continue to export edible oils to India at zero duty.