India’s cooking oil industry on Monday raised concerns about the adverse impact from the sharp rise in oil imports from South Asian Free Trade Area (SAFTA) countries, especially Nepal. Indian Vegetables Oil Producers’ Association (IVPA) wrote to Commerce Minister Piyush Goyal stating that the recent surge in duty-free refined edible oil imports signals a failure of India’s preferential trade arrangements.
These imports raise doubts about the effectiveness of the country’s tariff policy, and the long-term competitiveness of the domestic edible oil value chain.
Under the SAFTA and the India–Nepal trade treaty, vegetable oil imports from Nepal enjoy duty-free access to the Indian market. India levies an import duty of 16.5% for crude edible oils and 35.75% for refined oil for countries under the most favoured nation route.
“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,” according to the communication of Sudharkar Desai, President, IVPA.
IVPA has stated that the value addition from crude to refined oil is in the region of 5-7%. Tariff concessions on finished product and nil custom duty on raw materials is resulting in significant cost difference for Nepalese and Indian Producers, Desai has stated.
Nepal cooking oil exports mostly soybean, sunflower and palm variants to India surged from 47,295 tonne (2023) to 0.8 million tonne (MT) in 2025. Nepal’s annual edible oil consumption is about 0.43 MT and the country is a marginal producer of oilseeds.
The industry association has projected that imports from Nepal are expected to reach around 1 MT annually, making Nepal one of India’s largest suppliers of refined edible oils. The Nepali producers are selling finished oil at a price lower than Indian Industry, thus resulting in a significant surge in imports in recent periods, domestic processors said.
Industry sources said that the northern and eastern markets supplied cooking oils; the Nepal border accounts for an estimated 3.5 MT of annual oil consumption.
India imports about 57% of its edible oils consumption of 24-25 MT annually. India imports crude palm oils from Malaysia and Indonesia while soybean and sunflower oils are imported by Argentina, Brazil, Russia and Ukraine.
