November 3: The rise in export of palm oil and soybean oil has increased the overall export of Nepal by 15 percent. Palm and soybean oils are not produced in Nepal but have become a major export products in the recent days. The total export of Nepal in the first three months of the current fiscal year 2019/20 has reached 27.16 billion. This is not a result of increased production within the country but due to the export of palm and soybean oils, which are first imported in crude form, then processed and exported mainly to India.

Palm oil and soybean oil make up 27 percent of the total export during the review period. During this period, palm and soybean oils worth Rs 7.26 billion were exported from Nepal. If these two products are excluded, Nepal’s export in the first three months of current FY will be around Rs 20 billion, which is Rs 3 billion less compared to the same period of last fiscal year.

This clearly shows that the government’s initiative to promote domestic products in the international market has been ineffective as the increase in export of Nepal is basically due to the export of palm and soybean oils that are first imported and then repackaged and exported to India.

According to the Department of Customs, Nepal exported palm oil worth Rs 5.78 billion and soybean oil worth Rs 1.48 billion during the review period. In the meantime, Nepal imported palm oil worth Rs 5.54 billion and soybean oil worth Rs 4 billion, records maintained by the department have revealed.

The massive surge in import and export of palm oil in the recent time is attributed to the low import duty on the product in Nepal compared to India. The local businessmen are taking advantage of this gap in tariff imposed by the two countries. Nepal imposes 10 percent customs duty on import of palm oil while India imposes 40 percent customs duty for the same product.

India, which is one of the largest importers of palm oil in the world, had increased customs duty on crude palm oil imported from Association of Southeast Asian Nations (ASEAN) by $5 and refined palm oil by $9.

This has directly benefitted the local businessmen of Nepal where there is lower customs duty for import of palm oil. 

Nepali businessmen import crude palm oil from Indonesia, Malaysia, Brazil, Ukraine, Thailand and Argentina and export refined palm oil to India.

“Nepali exporters have been benefitting from the low customs duty for agricultural product that the Indian government has given to Nepal,” said Anand Bagaria, a local businessman.

“Bangladesh and Sri Lanka are also doing the same,” he added.