Nepal | May 29, 2020

Government formally asks Delhi to resume palm oil import from Nepal

Himalayan News Service
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Kathmandu, January 17

A week after India stopped importing refined palm oil from Nepal, the country’s top export item, the government has formally asked the southern neighbour to allow Nepali traders to export the commodity in the Indian market.

Citing that the ban imposed on import of palm oil is against Nepal-India trade relations and does not align with the spirit of bilateral trade treaties between the two nations, the Ministry of Industry, Commerce and Supplies (MoICS) today sent a letter to related Indian authorities through the Ministry of Foreign Affairs urging the Indian government to lift the ban imposed on import of the product.

Similarly, the government in its letter sent to the Indian government has stated that the refined palm oil that Nepali traders have been exporting to India is highly refined and complies with the value addition provision. Also, MoICS has stated that Nepali traders have been exporting only consumer packs of refined palm oil to India and Nepal is not a bulk exporter of the commodity.

“We’re not bulk exporters. Nepal exports palm oil in small packages ranging from one kg to 15 kg, which are widely used by Indian households.

Our palm oil exports account for a mere one per cent of Indian imports of the commodity,” informed Nabaraj Dhakal, joint-secretary at MoICS. “We are hopeful that the ban on import of refined palm oil from Nepal will be lifted as India’s import restriction on the product did not primarily intend to curb import of the product from Nepal.”

The Indian government last week had issued a notification stating a complete restriction on import of refined bleached deodorised palm oil and refined bleached deodorised palmolein.

Though the restriction was aimed at taming Malaysia, it also affected Nepal, which had exported refined palm oil worth Rs 8.36 billion to India in the first four months of this fiscal, making it the country’s largest export item.

Though Nepal never had competitive or comparative advantage in exporting palm oil to India, rising export of the product in recent months had been playing a crucial role in raising the country’s export base and narrow down the trade deficit.

Nepali traders import crude palm oil from Malaysia and Indonesia, process and package it here, before sending it to India. Traders were lured towards this business as India had imposed a duty of 40 per cent on import of palm oil from Malaysia and Indonesia, the two largest producers of palm oil in the world. Nepal’s palm oil, on the other hand, was subject to a duty of just six per cent in India as per the spirit of the bilateral trade treaty.

A version of this article appears in print on January 18, 2020 of The Himalayan Times.

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