Massive Imports of Refined Edible Oil from Nepal Cause Heavy Losses to Indian Refiners

25-Jul-2026 01:05 PM

Mumbai. Imports of RBD Palmolein into India from major suppliers like Indonesia and Malaysia were significantly curbed following a widening gap in import duties between crude and refined edible oils. Indian refiners had hoped for relief from this measure, but Nepal stepped in and dashed those expectations.

Under the South Asia Free Trade Area (SAFTA) agreement, Nepal is permitted to export products manufactured within its territory to India duty-free. However, Nepal is misusing this privilege to export large quantities of refined edible oil to India. Since edible oils imported from Nepal attract no customs duty, they are available in India at significantly lower prices. In contrast, Indian refiners must import crude edible oil—paying customs duties—and then refine it, resulting in higher production costs for the refined oil.

A notable aspect is that Nepal’s domestic production of oilseeds and oil is extremely limited—insufficient even to meet its own domestic demand. Despite this, it manages to export vast quantities of refined edible oil to India. This is because Nepal imports large volumes of crude palm oil, soybean oil, and sunflower oil from abroad, processes and refines them in local units, and subsequently ships the refined oil to India.

Major organizations within the Indian vegetable oil industry and trade sector have been urging the government to curb the surging imports of refined edible oil from Nepal; however, the government has not addressed the issue, despite being aware of the reality. The situation is complicated by Nepal's geography—sandwiched between India and China.

If the Indian government were to impose stricter controls, Nepal might lean closer to China. According to available data, 704,844 tonnes of refined edible oil worth NPR 146 billion were exported from Nepal to India during the last fiscal year.