The import of cheaper, duty-free edible oil is adversely affecting oilseed farmers and domestic processors, prompting the edible oil industry to urge the government to regulate the influx of low-cost refined cooking oil, particularly from Nepal.
The Solvent Extractors’ Association of India (SEA) has raised concerns in a letter to Prime Minister Narendra Modi, highlighting how duty-free imports under the South Asia Free Trade Area (SAFTA) agreement have led to a surge in refined soybean and palm oil imports from Nepal and other South Asian countries.
Under SAFTA, Nepalese refiners have been importing crude oil and exporting discounted refined oil to India, taking advantage of the duty structure. The SEA emphasized that this mechanism is being exploited by neighboring countries to dump their products duty-free into India, thereby suppressing domestic commodity prices and harming both farmers and agro-product processors.
Nepal itself produces very little soybean oil, yet its exports to India have been increasing rapidly. According to trade data, from October 15, 2024, to January 15, 2025, Nepal imported 1,94,974 tons of edible oil—mainly crude soybean and sunflower oil—while exporting 1,07,425 tons of edible oil to India during the same period. This import figure exceeds Nepal’s own monthly edible oil requirement of approximately 35,000 tons, which amounts to an annual consumption of 4,30,000 tons.
The SEA warned that what initially started as a minor issue has now escalated to a level that threatens the survival of the vegetable oil refining industry in eastern and northern India. Additionally, the influx of duty-free imports is causing significant revenue losses for the Indian government and distorting domestic markets, undermining the objective of maintaining high import duties on edible oils.
The association has urged the government to take immediate action by implementing a provisional safeguard measure under the SAFTA agreement and suspending the duty-free import of edible oil into India. It has also recommended imposing a minimum import price (MIP) for edible oil originating from SAFTA countries to prevent further market distortions.
The letter was also addressed to Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, Commerce and Industry Minister Piyush Goyal, Agriculture and Farmers Welfare Minister Shivraj Singh Chouhan, and Consumer Affairs and Food and Public Distribution Minister Pralhad Joshi, seeking their intervention in the matter.