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India concerned over ballooning import of soybean oil from Nepal

Vegetable oil pouring on vegetable oil background

KATHMANDU: India has suspected authenticity of the certificate of origin (COO) issued to Nepali exporters of soybean oil after increasing export of the product to Indian market though Nepal merely produces soybean oil.

Though palm oil was Nepal’s top export a year before, Nepali traders have switched to export of soybean oil after the Indian government squeezed import of palm oil. However, India has expressed concerns over ballooning export of soybean oil as Nepal itself produces much little of soybean oil.

Nepal exported soybean oil worth Rs 23.12 billion in the first eight months of the current fiscal year 2020-21, making soybean oil Nepal’s top export. However, export of soybean oil has raised concern over quality of export from Nepal of late.

Nepali soybean oil traders basically follow three steps to gain entry into Indian market. They first import crude palm oil, then process and package it, and export it.

India imposes almost 40 per cent tariff on imports of soybean oil, while in Nepal, import of soybean oil is subject to only 10 per cent duty. The imported soybean oil is processed and packaged here, before exporting it to Indian market.

India imposes a tariff of six per cent on imports of refined soybean oil from Nepal, as per the agreement on South Asian Free Trade Area. Lower tariff, once again, provides an edge to Nepali traders, as import of refined palm oil from other countries is subject to up to 50 per cent duty in India.

These tariff differentials are the main reasons for surge in export of soybean oil to India, according to trade experts.

Meanwhile, officials of the Ministry of Industry, Commerce and Supplies said that discussions will be held with traders of soybean oil following concerns raised by Indian authorities.

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