Complaining that there has been a massive influx of refined soyabean oil and palm oil from Nepal to India, flouting Rules of Origin, the Solvent Extractors’ Association of India (SEA) has requested the Government to regulate the inflow of edible oils from Nepal and other SAARC countries.
In letters addressed to the Prime Minister and various Central ministers, Sanjeev Asthana, SEA President, said the import of edible oil at nil duty under the SAFTA agreement from Nepal is creating havoc not only in Northern and Eastern India but also in Southern and Central regions. This massive influx is seriously hurting domestic refiners, and farmers and leading to a loss of revenue to the Government.
Nepal’s annual edible oil requirement is about 4.30 lakh tonnes (lt), which is around 35,000 tonnes per month. Referring to the edible oil scenario in Nepal after India hiked the import duty on edible oils in September 2024, he said Nepalese refiners started importing large quantities of crude edible oils and started exporting refined oils into India at a discount rate as Nepal allows the import of crude oil at nil duty.
From trickle to deluge
During October 15, 2024, to January 15, 2025, Nepal imported 1.94 lt of edible oils, mainly crude soyabean oil and sunflower oil, and exported 1.07 lt of edible oils to India. Citing market sources, he said at least 50,000 to 60,000 tonnes of refined oil per month will flow from Nepal to India due to the duty advantage under SAFTA (South Asian Free Trade Area) agreement.
“What started as a trickle, in the beginning, has now assumed alarming proportions and is not only threatening the very survival of the vegetable oil refining industry in Eastern and Northern India but also resulting in huge revenue loss to the Government of India. Apart from these losses, it is harming the interest of oilseed farmers as it results in distorting our markets and the very purpose of keeping high import duties on edible oils is getting negated,” he said.
SEA President urged the Government to suspend the duty-free import of edible oils under SAFTA when oilseeds and oils are not produced in the countries using the SAFTA agreement.
He recommended that SAFTA be renegotiated in case of agro-commodity imports. Import of essential and sensitive agro commodities such as edible oils should be monitored very closely in consultation with sector associations.
Rules of Origin
“It is important to note that there is a high level of substitution factor in the case of edible oils, which is not the case in most of other commodities. Therefore excessive duty-free import of edible oil hurts the whole edible oil sector, not just one product line,” he said.
Stating that the imported edible oil coming from SAFTA countries does not meet the Rules of Origin, he said such oils should be restricted under the duty-free import region.
Urging the need to prevent dumping from non-SAFTA countries by misusing the SAFTA provisions, Asthana said SAFTA members should not emerge as a dumping ground for duty-free imports by third countries.
The Government must initiate a consultation with the affected sectors, and take corrective measures to protect the interests of farmers and the local economy.
Stressing the need to initiate a provisional safeguard measure, he said the Government should suspend the import of duty-free edible oils to India and impose a minimum import price (MIP) after calculating the cost of oil production based on MSP (minimum support price) for oilseeds in India.
To control such practices and to prevent injury to the Indian economy and farmers, the duty-free import quantity should be restricted or an MIP should be imposed, he said.
He suggested that imports be channelised through some public sector undertakings such as NAFED to manage and regulate the flow of imports from Nepal to India.
The SEA President also suggested the need to fix quota for import of refined oils from Nepal.
