The Indian Vegetable Oil Producers' Association (IVPA) has called on the government to address an unprecedented surge in duty-free refined edible oil imports from Nepal under the South Asian Free Trade Area (SAFTA) framework. According to latest reports from The Hindu BusinessLine, imports from Nepal jumped more than 17-fold in two years, rising to over 804,000 tonnes in 2025 from 47,295 tonnes in 2023. The association warned that volumes are on track to reach 1 million tonnes annually, making Nepal one of India's largest suppliers of refined edible oils. As reported by Mint, these imports touched 284,976 tonnes in the first five months of 2026, posing a key concern for India's vegetable oil industry. As reported by Business Standard, IVPA President Sudhakar Desai stated that the increase marked a significant structural shift in India's edible oil trade requiring policy attention.
As reported by The Hindu BusinessLine, IVPA President Sudhakar Desai emphasized that the scale of duty-free imports calls for a policy review to protect the competitiveness of India's domestic refining industry and support farmers. The association warned that the surge could impact refining capacity utilisation, future investment and demand for Indian-grown oilseeds such as soybean and mustard. The shift is estimated to cost the government ₹2,000-2,500 crore annually in customs revenue while shifting value addition outside India. According to Mint, India, the world's largest importer of edible oils, remains structurally dependent on overseas supplies as domestic production meets only 40% of its total requirement, with India importing about 60% of its edible oil consumption of 24 million-25 million tonnes annually. Desai noted that India has consistently championed regional economic cooperation and remains fully committed to the objectives of the SAFTA Agreement, but the extraordinary pace and scale of duty-free imports require comprehensive policy attention to ensure that India's trade framework, tariff policy and domestic value-addition objectives continue to remain aligned.
According to Mint, Indian edible oil producers are concerned that the surge in imports from Nepal distorts the domestic edible oil market by creating an uneven playing field for Indian processors. Imports from Nepal enjoy preferential treatment under the South Asian Free Trade Area agreement, which allows member countries to export eligible goods at concessional or zero customs duty, provided they meet the prescribed rules of origin. Comparatively, India levies import duty of 16.5% on crude edible oils and 35.75% on refined oil for countries under the most favoured nation route. As reported by Mint, India primarily imports crude edible oil rather than refined oil as part of its value-addition strategy, with crude oils such as palm, soybean and sunflower processed at domestic refineries before reaching consumers. This policy supports local refining capacity, generates employment, attracts investment and creates demand for allied industries such as packaging and logistics. However, the rapid increase in duty-free imports of refined edible oils from Nepal has altered this balance by shifting refining activity outside India while domestic refiners continue to import crude oils on payment of applicable customs duties and Agriculture Infrastructure and Development Cess (AIDC).
As reported by Mint, domestic refining creates demand for locally produced oilseeds such as soybean and mustard, which support millions of Indian farmers. If refiners lose market share to imported refined oil, domestic crushing and refining operations could slow, reducing demand for locally produced oilseeds. Lower refining activity reduces demand for domestically produced oilseeds—particularly soybean and mustard—exerting downward pressure on farm-gate prices and affecting farmer incomes in major producing states such as Madhya Pradesh, Maharashtra and Rajasthan. This undermines the objectives of the National Mission on Edible Oils, minimum support price operations and the government's vision of Atmanirbhar Bharat by weakening the domestic oilseed value chain. According to Mint, the rising volume of duty-free imports also has implications for customs revenue, estimated by the industry at ₹2,000 crore-2,500 crore annually.
According to The Hindu BusinessLine, IVPA has requested the government to undertake a detailed verification of compliance with SAFTA's Rules of Origin through the Customs Administration of Rules of Origin under Trade Agreements Rules, 2020 (CAROTAR), citing Nepal's limited domestic availability of palm oil and soybean. The association also sought a review of the existing tariff structure. As reported by Mint, experts said Nepal has limited domestic production of palm oil and soybean, making it important for Indian authorities to verify whether the refined oils it exports satisfy origin requirements. The association believes such verification would help ensure that preferential tariff benefits are extended only to products that genuinely satisfy the prescribed origin requirements. As reported by Business Standard, Desai emphasized that their representation is not intended to restrict legitimate bilateral trade with Nepal or dilute India's international commitments, but aims to ensure preferential tariff benefits go only to products that genuinely qualify under the Rules of Origin. The industry has called for stricter implementation of rules of origin and to verify that imports from Nepal meet the rules of origin prescribed under the South Asian Free Trade Area agreement.
