Nepal’s exports soared to Rs 247.57 billion in the first 11 months of the current fiscal year (mid-July 2024 to mid-June 2025), marking a 77.77 percent year-on-year increase, according to the latest data from the Department of Customs.

The surge was primarily fueled by a sharp rise in refined edible oil exports, capitalizing on India’s temporary import tariff policy in effect between mid-September 2024 and the end of May 2025.

At the forefront of the export boom was refined soybean oil, with shipments totaling Rs 93.51 billion during the review period.Refined sunflower oil followed, contributing Rs 11.33 billion to the export total.

The boom was triggered in mid-September 2024, when India raised import duties on both crude and refined edible oils by 20 percentage points to shield its domestic producers. As a result, the effective import duty on crude oils rose from 5.5 percent to 27.5 percent, and on refined oils from 13.75 percent to 35.75 percent.

Before this revision, India had exempted crude palm, soybean, and sunflower oils from import duties.

Nepali exporters quickly moved to exploit the tariff gap. 

They import crude or half-processed oils from third countries such as Malaysia, Indonesia and Ukraine paying a minimum tariff, process them and export to India, taking advantage of zero tariff provision on the export of finished goods under the South Asian Free Trade Area (SAFTA), a free trade arrangement among the SAARC countries.

Read: India’s Import Duty Cut on Crude Edible Oils Deals a Blow to Nepali Traders

Policy Reversal Poses Setback

In May-end, in a move aimed at curbing the rising prices of edible oils and fats, the Indian government reduced the basic import duty on crude edible oils by 10 percentage points to 10 percent. After factoring in the Agriculture Infrastructure and Development Cess, the effective duty dropped from 27.5 percent to 16.5 percent, according to Indian media reports.

This policy reversal came amid growing pressure from the Solvent Extractors’ Association of India (SEA), which urged the government to check imports from Nepal and other SAARC nations. The SEA alleged that Nepali traders were bypassing “rules of origin” requirements under the SAFTA framework.

Imports, Trade Deficit Also Rise

While exports surged, Nepal’s imports also rose by 13.2 percent year-on-year to Rs 1,644.79 billion during the same 11-month period. Consequently, the trade deficit widened by 6.3 percent to Rs 1,397.22 billion.

Diesel remained Nepal’s top import, valued at Rs 115.55 billion, followed by crude soybean oil (Rs 95.72 billion), petrol (Rs 58.58 billion), and liquefied petroleum gas (LPG) (Rs 57.36 billion).

Overall, Nepal’s foreign trade reached Rs 1,892.37 billion, reflecting an 18.8 percent year-on-year increase, the Customs data showed.