Nepal | January 27, 2020

Govt initiates talks with India to resume palm oil export

Himalayan News Service

Kathmandu, January 12

The Ministry of Industry, Commerce and Supplies has taken the initiative to resume the supply of palm oil from Nepal to India, which has been halted completely since Friday, through bilateral discussions.

State Minister for Industry Motilal Dugar informed that secretary-level discussions between Nepal and India have been initiated to ensure that the Indian government’s blanket decision to restrict import of refined palm oil does not apply to Nepal and that Nepali traders are allowed to export the product in the Indian market.

Issuing a notification on Thursday, the Directorate General of Foreign Trade (DGFT) of India had imposed complete restriction on import of refined bleached deodorised palm oil and refined bleached deodorised palmolein. As refined palm oil has emerged as Nepal’s top export lately, the sudden restriction on import imposed by DGFT has worried Nepali traders involved in the palm oil business as they had been exporting a majority of refined palm oil to the Indian market.

Minister Dugar has assured that the government will help in the resumption of export of refined palm oil to India. “Commerce secretary-level discussions between the two nations have already begun to resolve this issue. If required, the government will also hold discussions and meetings at the ministerial-level to make sure that import restriction on palm oil does not apply to Nepal,” he said.

Meanwhile, Commerce Secretary Baikuntha Aryal also said that export of palm oil to India would resume soon. “We are in continuous dialogue with concerned Indian authorities on this issue,” he informed.

Along with palm oil traders who claim to have stock of refined palm oil worth billions of rupees and failure to resume export of the product to India would hit hard their investment, the import restriction on the product imposed by India has become a headache for the government too as export of refined palm oil covers a majority of overall exports from the country and has been helping to narrow down the ballooning trade deficit of the country.

As per Nepal Rastra Bank, the country has exported refined palm oil worth Rs 8.36 billion to India in the first four months of this fiscal year.

Nepal’s export of palm oil to India had started raising eyebrows since the end of last fiscal year when it became the top export item. Nepal had exported palm oil worth Rs 10.3 billion in the last fiscal from ‘zero’ export of the commodity a year before that. This jump took many by surprise because Nepal does not produce palm oil on its own.

However, experts have been saying that export of refined palm oil from Nepal to other countries means less to the economy as Nepal itself does not produce palm oil. 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 imports of palm oil from Malaysia and Indonesia while Nepal’s palm oil, on the other hand, is subject to a duty of just six per cent in India.


A version of this article appears in print on January 13, 2020 of The Himalayan Times.


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