Duty free edible oil imports from Nepal surge 548% in 2025, Indian vegetable oil producers seek urgent govt action

The Indian Vegetable Oil Producers' Association (IVPA) has said that India’s South Asian Free Trade Area (SAFTA) and the India–Nepal Trade has resulted in a surge in duty free vegetable oil imports from Nepal in recent years. The  imports rose from 47,295 MT in 2023 to 124,056 MT in 2024, and then surged to 804,295 MT in 2025 — an increase of nearly 680,000 MT over the previous year, representing 548% year-on-year growth and more than a 17-fold increase over 2023, IVPA points out.

Stating that the average monthly imports rose correspondingly, from approximately 3,941 MT in 2023 and 10,338 MT in 2024 to 67,025 MT in 2025, IVPA wanted the government to take note of a pattern that indicates a structural shift in trade flows rather than normal market growth or seasonal variation.

In a letter to Union Commerce Minister Piyush Goyal on July 20, IVPA sought the government's urgent attention to the sharp and sustained surge in vegetable oil imports from Nepal as it is undermining domestic refiners and oilseed farmers, and causing significant revenue loss to the Central government. “Under the SAFTA Agreement and the India–Nepal Trade Treaty, vegetable oil imports from Nepal enjoy duty-free (0% tariff) access to the Indian market. This preferential treatment has driven a steep rise in imports of refined soybean and palm oil from Nepal, deepening the vulnerability of the domestic industry. IVPA fully supports the objectives of the SAFTA Agreement and the India–Nepal Trade Treaty in advancing genuine regional economic integration. However, the recent surge in duty-free refined edible oil imports raises serious concerns regarding the integrity of preferential trade arrangements, the effectiveness of India's tariff policy, and the long-term competitiveness of the domestic edible oil value chain”, the association said in its letter to the minister.

According to IVPA, the value addition from crude to refined oil is in the region of 5-7% and tariff concessions on finished product and nil custom duty on raw materials is resulting in significant cost difference for Nepalese and Indian producers. “The Nepalese producers are selling finished oil at a price lower than Indian Industry, thus resulting in a significant surge in imports in recent periods. Based on prevailing trends and industry estimates, imports from Nepal are expected to reach approximately 10 lakh MT annually, making Nepal one of India's largest suppliers of refined edible oils”, the letter said.

The northern and eastern Indian markets served through the Nepal border account for an estimated 35 lakh MT of annual edible oil demand and Nepal alone could therefore supply nearly 25% of this regional market at zero customs duty, creating a significant structural cost advantage over domestic refiners who import crude oils on payment of applicable duties. “The scale, pace and persistence of this surge warrant a comprehensive policy review of its implications for India's tariff policy, the integrity of the SAFTA framework, domestic refining capacity, farmer welfare, Government revenue, and India's long-term edible oil security”, the association demands.