IVPA Sounds Alarm as Duty-Free Refined Oil Imports from Nepal Surge 17-Fold to 8 Lakh Tonnes

What was a modest trade flow just two years ago has become a structural force in India's edible oil market. Refined edible oil imports from Nepal stood at 47,295 tonnes in 2023, climbed to 1.24 lakh tonnes in 2024, and then vaulted to over 8.04 lakh tonnes in 2025 — a more than 17-fold increase within two years.

IVPA, in a media statement, said imports are now on a trajectory to approach 1 million tonnes annually, which would make Nepal one of India's single largest suppliers of refined edible oils. The imports enter India duty-free under the South Asian Free Trade Area (SAFTA) framework, giving them a structural cost advantage over domestically refined oils produced from imported crude on which customs duties and the Agriculture Infrastructure and Development Cess (AIDC) are payable.

IVPA argues that the rapid influx of duty-free refined oil is shifting value addition outside India — precisely the opposite of what successive domestic policy measures have sought to achieve. Indian refiners continue to import crude edible oils while paying applicable customs duties and AIDC, placing them at a competitive disadvantage against refined imports that face no such levies.

The downstream impact extends beyond the refinery gate:

• Oilseed farmers: Reduced domestic refining demand weakens offtake for soybean and mustard, crops grown by millions of Indian farmers.
• Investment and capacity: Industry viability concerns may deter future capital expenditure in refining infrastructure.
• Government revenue: Industry estimates the annual customs revenue foregone at ₹2,000–2,500 crore, a figure that grows as import volumes rise.

IVPA characterised the shift as a significant structural change in India's edible oil trade that merits timely policy attention.

At the heart of IVPA's representation is a question of genuine origin. Nepal has limited domestic availability of both palm oil and soybean — the two primary feedstocks for the refined oils being exported. IVPA has asked the government to verify whether imports from Nepal genuinely satisfy the Rules of Origin prescribed under SAFTA, using the existing Customs Administration of Rules of Origin under Trade Agreements Rules, 2020 (CAROTAR).

The association was careful to frame its request as one of integrity, not restriction. IVPA President Sudhakar Desai stated that the representation is not aimed at curtailing legitimate bilateral trade with Nepal or diluting India's international commitments, but at ensuring that preferential tariff benefits accrue only to products that genuinely qualify under the prescribed origin norms — and that Indian industry competes on a level playing field.

IVPA's formal representation to the government covers two principal requests:

1. Strengthen CAROTAR implementation — Conduct detailed verification of Rules of Origin compliance for refined edible oil imports from Nepal under the SAFTA framework, leveraging existing customs machinery.

2. Review the tariff structure — Examine whether the current duty differential between refined imports and crude oil imports continues to support India's domestic value-addition objectives.

The association also invoked the 'Aatmanirbhar Bharat' framework, arguing that India's long-term edible oil security requires not just reliable import access but a globally competitive domestic refining industry — one that supports farmers, creates employment, and builds resilient supply chains. As the world's largest edible oil importer, India's ability to balance open trade commitments against domestic industry protection will be closely watched.