Led by soybean oil, Nepal's exports to India surge by 138 per cent

KATHMANDU — Led by a sharp rise in the export of processed soybean oil, Nepal's exports to India surged by nearly 138 per cent during the first quarter of the current fiscal year 2025–26, the country's Department of Commerce has revealed.

As per the foreign trade statistics released by the department, Nepal exported goods worth NPR 59.12 billion during the first three months of the current fiscal year, which began in mid-July. This represents a year-on-year increase of 137.9 per cent.

During the same period in the previous fiscal year 2024–25, the Himalayan republic had exported goods worth only NPR 24.85 billion. The southern neighbour continues to remain Nepal's largest trading partner.

Statistics show that massive exports of processed cooking oil — mainly processed soybean oil — contributed significantly to the surge in exports to India. Nepal exported processed soybean oil worth NPR 30.69 billion, accounting for nearly 52 per cent of total exports to India.

With exports worth NPR 2.13 billion, processed sunflower seed oil ranked second, while palm oil, with NPR 1.73 billion in exports, stood third. Exports of these products to India during the same period last fiscal year were very limited.

Nepali firms were able to export these items in large quantities due to duty differentials, as India imposes certain tariffs on the import of edible oils from other countries while Nepali goods enjoy duty-free access to the Indian market under the South Asian Free Trade Area (SAFTA) agreement.

Although India reduced its basic customs duty on crude edible oil to 10 per cent from 20 per cent in late May, the duty on refined oil remained unchanged at 32.5 per cent. The effective duty, including the Agriculture Infrastructure and Development Cess and the Social Welfare Surcharge, stood at 16.5 per cent for crude edible oil and 35.75 per cent for refined oil.

Almost all raw edible oil used in Nepal’s export industry is imported from various countries, processed domestically, and then re-exported to India.

Rabi Shankar Sainju, a trade expert, said that the massive export of edible oil to India was not sustainable because it relied on the duty difference that India applied to Nepali goods and third-country goods. "If India reduces the duty substantially to edible oil from other countries, 50 per cent of Nepal's total exports to India could be wiped out," he said.