The Indian Vegetable Oil Producers’ Association (IVPA) has called for an urgent policy review following a dramatic surge in duty-free refined edible oil imports from Nepal under the South Asian Free Trade Area (SAFTA) framework. According to a media statement by IVPA, imports have ballooned from 47,295 tonnes in 2023 to 1.24 lakh tonnes (lt) in 2024, and further to over 8.04 lt in 2025 – an increase of more than 17-fold within two years. The association projects that imports could approach 1 million tonnes annually, making Nepal one of India’s largest suppliers of refined edible oils.
Surge in Duty-Free Imports
The year-on-year growth in refined edible oil imports from Nepal, as reported by IVPA, is summarised below:
| Year | Volume (tonnes) |
|---|---|
| 2023 | 47,295 |
| 2024 | 1,24,000 |
| 2025 | 8,04,000+ |
IVPA noted that this sharp increase represents a significant structural shift in India’s edible oil trade and merits timely policy attention to ensure alignment with India’s trade framework, tariff policy, and domestic value-addition objectives.
Implications for Domestic Refining and Farmers
India remains the world’s largest importer of edible oils, relying on imports to bridge the domestic demand-supply gap. Successive policy measures have encouraged domestic refining to retain value addition, investment, and employment within the country. However, IVPA warned that the rapid increase in duty-free imports of refined edible oils 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 the Agriculture Infrastructure and Development Cess (AIDC).
The association said this has direct implications for:
- Refining capacity utilisation – reduced throughput for domestic plants.
- Future investments – uncertainty discourages new projects.
- Manufacturing competitiveness – domestic refiners face cost disadvantages.
- Demand for domestically produced oilseeds – particularly soybean and mustard, which support millions of Indian farmers.
IVPA estimates that the rising volume of duty-free imports results in customs revenue losses of ₹2,000–2,500 crore annually for the government, while progressively transferring value addition outside India.
IVPA’s Request for Policy Review
Sudhakar Desai, President of IVPA, stated: “India has consistently championed regional economic cooperation and remains fully committed to the objectives of the SAFTA agreement. However, the extraordinary pace and scale of duty-free refined edible oil imports call for a comprehensive policy review to ensure that preferential trade arrangements continue to promote genuine regional value addition while safeguarding the competitiveness of India’s domestic refining industry, supporting farmer welfare and strengthening the nation’s long-term edible oil security.”
In its representation, IVPA has requested the government to:
- Undertake a detailed verification of compliance with Rules of Origin prescribed under SAFTA through the existing customs framework, including the Customs Administration of Rules of Origin under Trade Agreements Rules, 2020 (CAROTAR).
- Review the existing tariff structure to ensure continued support for domestic value addition.
Given Nepal’s limited domestic availability of palm oil and soybean, IVPA believes such verification would help ensure that preferential tariff benefits are extended only to products genuinely satisfying the prescribed origin requirements. Desai clarified: “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 and protecting domestic value addition.”
The association reiterated that India’s long-term edible oil security depends not only on assured imports but also on a strong domestic refining sector and sustainable farmer incomes. The government’s response to this policy review request will be closely watched by importers, refiners, and oilseed growers alike.
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