Nepal’s exports of refined vegetable oil continued to surge exponentially in the eighth month, mid-February to mid-March, of the current fiscal year, significantly contributing to the overall rise in exports.
Refined soybean oil and sunflower oil remained Nepal’s top two export commodities in terms of value in the first eight months, according to the latest data from the Department of Customs.
In the first eight months of the current fiscal year, Nepal imported 341.97 million liters of crude soybean oil worth Rs 51.35 billion and exported 228,548.19 tonnes of refined soybean oil and fractions valued at Rs 47.94 billion. Comparatively, during the same period last fiscal year, the country had imported 59.65 million liters of crude soybean oil worth Rs 9.28 billion and exported only 3,691.57 tonnes of refined soybean oil and fractions worth Rs 754.14 million.
Similarly, Nepal imported 139.28 million liters of crude sunflower oil worth Rs 20.26 billion and exported 35,000 tonnes of sunflower seed, refined sunflower oil, and fractions worth Rs 7.98 billion in the same period this fiscal year. The same period in the last fiscal year saw imports of 88.59 million liters of crude sunflower oil worth Rs 11.91 billion and exports of only 798,585 kg of sunflower seed, refined sunflower oil and fractions worth Rs 148.72 million.
Read: Nepal’s Refined Soybean Oil, Fractions Exports Soar to Rs 32.41 Billion
The sharp rise in exports is primarily attributed to India’s decision in September 2024 to raise import duties on edible oils, creating a lucrative opportunity for Nepali traders under the South Asian Free Trade Area (SAFTA) agreement, which allows finished goods from Nepal to enter India duty-free.
Nepali traders have capitalized on this by importing crude or semi-processed edible oils from countries such as Malaysia, Indonesia, and Ukraine at minimal tariffs, refining them domestically, and exporting the final product to India.
Six months ago, the Indian government increased import duties on crude palm, soybean, and sunflower oil to 20%, while the duty on refined oils was raised from 12.5% to 32.5%. Additionally, the Agriculture Infrastructure and Development Tax further increased the effective tax rate to 27.5% on crude oil and 35.75% on refined oil, giving Nepal a competitive edge due to its duty-free access.
The rapid rise in refined oil imports from Nepal has already sparked concern among Indian refiners, who argue that the duty-free advantage has negatively impacted domestic refiners, farmers, and government revenues.
Indian industry representatives have urged Prime Minister Narendra Modi’s government to impose restrictions on refined oil imports from Nepal. However, some industry leaders in Nepal dismiss these concerns, arguing that Nepal’s production capacity is too small to meet even the demand of a single Indian state.
Besides refined vegetable oil, Nepal’s other major exports during the period included wool and fine animal hair carpets & floor coverings (Rs 7.21 billion), big cardamom (Rs 5.84 billion); rolled iron and steel, with 600 mm+ width and coated with aluminum-zinc alloys (Rs 3.58 billion)
On the import side, crude soybean oil ranked as Nepal’s second-largest import after diesel in terms of value. As petroleum products continued to dominate import bills, other major imports included ferrous products from direct iron ore reduction, smartphones, hot-rolled & flat iron and steel and crude sunflower oil.
Despite exports rising by 57.2% and imports increasing by 11.2%, Nepal’s trade deficit expanded 6.22% year-on-year (y-o-y) to Rs 987.39 billion in the first eight months of FY25.
During this period, Nepal’s total imports stood at Rs 1,145.56 billion, while total exports reached Rs 158.17 billion, bringing the total foreign trade volume to Rs 1,303.73 billion, a 15.29% y-o-y increase, according to the Department of Customs.
