India makes exemption for Nepal, allows some refined palmolein imports: sources

MUMBAI/KOLKATA (Reuters) - India, which restricted imports of refined palm oil and palmolein in January, has exempted Nepal and has started issuing licenses to import some refined palmolein from the Himalayan nation, two government officials told Reuters.

FILE PHOTO: A palm oil seed is seen at a plantation in Pulau Carey, Malaysia, January 31, 2020. REUTERS/Lim Huey Teng/File Photo

The move could put pressure on Indian refiners as imports from Nepal were allowed at zero duty under a regional treaty. It will also help Nepal, as refined palm oil and palmolein are its largest export earners.

The initiative may also help India counter the growing influence of China in Nepal, where Chinese investments have been climbing. Nepal, a big consumer of goods made by its bigger neighbor India, had been urging New Delhi to allow imports of refined palm oil and palmolein.

India had restricted imports of the products in January, a move that targeted top supplier Malaysia, which had criticized New Delhi’s new citizenship law and its policies in Kashmir, but the measure also hurt Nepal.

Licenses to import around 88,000 tonnes of refined bleached deodorised palmolein from Nepal were issued to about half a dozen importers, a Kolkata-based official at India’s Directorate General of Foreign Trade (DGFT) said on Wednesday.

“We have made an exception with Nepal. Refined palm oil imports are not allowed from any other country,” said another DGFT official.

India’s commerce ministry did not immediately respond to a request for information.

India’s vegetable oil imports from Nepal surged to $251 million in 2019 from just $20.69 million a year ago as refiners in Nepal took advantage of a regional trade agreement to export edible oil at zero duty, according to data compiled by the Indian Ministry of Commerce and Industry.

New Delhi’s refined palm oil and palmolein imports from Nepal in 2019 jumped 1,260% from a year ago to 210,033 tonnes.

India accounts for nearly two-thirds of Nepal’s trade and is its sole supplier of fuel.

Palm oil accounts for nearly two-thirds of India’s total edible oil imports. The country buys more than 9 million tonnes of palm oil annually, mainly from Indonesia and Malaysia, the world’s top two producers.

Nepal imports crude palm oil from Indonesia and Malaysia and exports to India after refining.

Indian edible oil refiners have long opposed duty free imports from Nepal, saying these shipments violate “rules of origin” and “value addition” norms.

“Imports should not be allowed at zero duty as it has been putting pressure on local refiners,” said B.V. Mehta, executive director of the Solvent Extractors’ Association (SEA).

Nawaraj Dhakal, joint secretary in Nepal’s commerce ministry, said the lack of tariffs was warranted because Nepal’s refined product added value.

Reporting by Rajendra Jadhav and Subrata Nagchoudhury; Additional reporting by Gopal Sharma in KATHMANDU ; Editing by Edmund Blair, Alexandra Ulmer and David Evans