India’s edible oil industry has sounded an alarm over a dramatic 17-fold surge in imports from Nepal, prompting calls for an urgent policy review. According to the Indian Vegetable Oil Producers' Association (IVPA), imports from Nepal rose from 47,295 tonnes in 2023 to 124,056 tonnes in 2024, before exploding to more than 804,000 tonnes in 2025. At the current pace, annual imports could approach one million tonnes, potentially making Nepal one of India’s largest suppliers of refined edible oils.
Unprecedented surge in imports
The IVPA said the unprecedented increase marks a structural shift in India's edible oil trade and warrants immediate policy attention to ensure that trade agreements remain aligned with domestic value addition, farmer welfare and long-term edible oil security. India is the world’s largest importer of edible oils and relies heavily on imports to bridge the gap between domestic production and consumption. While government policy has encouraged domestic refining to generate employment, investment and value addition within the country, the IVPA noted that the recent surge in duty-free refined oil imports is shifting refining activity outside India.
The year-on-year growth is stark:
| Year | Imports from Nepal (tonnes) |
|---|---|
| 2023 | 47,295 |
| 2024 | 124,056 |
| 2025 | >804,000 |
Impact on domestic refining
Domestic refiners are being hit by a double disadvantage. Under the South Asian Free Trade Agreement (SAFTA), refined edible oils from Nepal enter India duty-free, while Indian refiners must pay the Agriculture Infrastructure and Development Cess (AIDC), putting them at a competitive disadvantage. The IVPA warned that the trend could impact refining capacity utilisation, future investments, manufacturing competitiveness and demand for domestically produced oilseeds such as soybean and mustard.
Policy recommendations
The association has sought a comprehensive policy review of the SAFTA Agreement to ensure preferential trade arrangements continue to promote genuine regional value addition while safeguarding the competitiveness of India’s domestic refining industry. IVPA President Sudhakar Desai emphasised: "India remains committed to the objectives of the SAFTA Agreement and regional economic cooperation. However, the extraordinary pace and scale of duty-free refined edible oil imports call for a comprehensive policy review to ensure preferential trade arrangements continue to promote genuine regional value addition while safeguarding the competitiveness of India's domestic refining industry."
In a written representation, the IVPA stressed: "Our representation is not intended to restrict legitimate bilateral trade with Nepal or dilute India's international commitments. It seeks to preserve the integrity of India's trade agreements by ensuring that preferential tariff benefits accrue only to products genuinely qualifying under the Rules of Origin, while maintaining a level playing field for Indian industry."
Besides stronger verification of Rules of Origin, the IVPA has also sought a review of the existing tariff structure to ensure continued support for domestic value addition.
Revenue loss and competitiveness
The IVPA estimated that the surge in duty-free refined oil imports has caused a customs revenue loss of ₹2,000–2,500 crore, while transferring value addition outside India. The association said India’s long-term edible oil security depends not only on reliable access to imports but also on maintaining a globally competitive domestic refining industry that supports farmers, creates jobs and strengthens manufacturing and supply chains.
The development underscores the tension between regional trade commitments and domestic industrial policy, with importers and trade policy professionals closely watching the government’s response.
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