Nepal’s soybean oil exports to India surged more than tenfold in 2025, propelled by duty-free access under the South Asian Free Trade Area (SAFTA), significantly altering regional edible oil trade flows and intensifying pressure on Indian refiners.
According to data compiled by India’s Ministry of Commerce and Industry, India imported a record 694,153 metric tonnes of refined soybean oil from Nepal in 2025, compared with just 65,138 tonnes in the previous year. The sharp rise has helped Nepal double its total merchandise exports to India to $2 billion during the year, with soyoil shipments alone accounting for over $1 billion.
The spike follows India’s decision in September 2024 to raise import duty on refined soybean oil to 35.75% from 13.75%. The higher tariff prompted Nepali refiners to ramp up imports of crude soybean oil from Argentina and Brazil, refine it domestically, and re-export the finished product to India under SAFTA’s duty-free provisions.
As a result, Nepal’s share in India’s total soybean oil imports of 5.6 million tonnes climbed to 12.3% in 2025, making it the third-largest supplier after Argentina and Brazil.
Industry executives in Nepal say exports could increase further in 2026 as additional refining capacities come on stream. Vikkas Dugar, Managing Director of Swastik Oil Industries, noted that Nepal currently exports between 60,000 and 70,000 tonnes of soybean oil to India monthly, with volumes expected to rise slightly as two to three new refineries become operational.
However, the trade route is not without logistical challenges. Being landlocked, Nepal imports crude soybean oil via Haldia Port in eastern India, transports it overland to domestic refineries, and then ships the refined oil back to India. Despite the added transport costs, Nepali refined oil remains slightly cheaper due to the tariff differential.
The development has triggered concern among Indian refiners. While Nepali shipments enter India duty-free, domestic refiners must pay a 16.5% import duty on crude soybean oil, raising their processing costs and narrowing margins.
B.V. Mehta, Executive Director of the Solvent Extractors’ Association of India, said, “The duty structure is distorting trade flows. India needs to import edible oils to bridge its domestic shortfall. However, Nepal’s duty advantage is effectively diverting soybean oil through the Himalayan nation instead of allowing direct imports from Argentina and Brazil,” he said.
The surge has also impacted edible oil pricing in India’s border regions, where cheaper Nepali supplies have put downward pressure on local prices, intensifying competition for domestic processors.
As India remains the world’s largest importer of vegetable oils, the evolving trade dynamics with Nepal underscore how tariff differentials and regional trade agreements can rapidly reshape supply chains and competitiveness in the edible oil sector.