May 26: The export of soybean oil from Nepal has been affected after India reduced the customs duty on the oil imported from abroad. Exports of refined soybean oil have been particularly affected since last April due to the competition of Nepali exporters with other countries.

Refined soybean oil worth Rs 5.17 billion was being exported from Nepal to India per month until mid-March. But the export of soybean oil as shrunk to  Rs 2 billion per month since April. 

According to the data of the Department of Customs, refined soybean oil worth Rs 4.54 billion was exported to India between mid-February to mid-March. However, soybean oil worth Rs 1.90 billion was exported in between mid-March to mid-April while the export during mid-April to mid-May was worth Rs 2.04 billion. Refined soybean oil is the major export product of Nepal. 

Earlier, India used to charge up to 45 percent customs duty for the import of soybean oil. However, as Nepal is a SAARC member country, it enjoyed duty-free access to the Indian market. That is the reason why Indian businessmen had been buying soybean oil from Nepal, which was available at a relatively cheaper rate compared to that of other countries. Operator of OCB Foods Suresh Rungta says that the exports from Nepal have been affected after India reduced the customs duty recently. 

According to him, India has announced zero customs duty on soybean oil effective from Wednesday. Now, the import of soybean oil from other countries will no longer be subject to customs duty. In such case, Rungata says that the exports from Nepal would be further affected.  

"We import raw materials from third countries and export refined oil after processing. Doing so is more expensive here than in other countries," he said, "In such a case, it would be cheaper for Indian businessmen to import oil from a third country than from Nepal. As a result, our soybean oil exports will be affected."

Overall, exports of refined soybean oil have increased by about 27 percent by mid-April. According to the data, soybean oil exports amounted to Rs 45.35 billion in the first ten months of the current fiscal year, which is Rs 9.59 billion more than last fiscal year. In the corresponding period of the previous year, soybean oil exports stood at Rs 35.75 billion. 

Nepali businessmen have been importing crude soybean oil from Argentina, Brazil, Paraguay, Indonesia and Ukraine. It is being exported to India by adding up to 30 percent value addition after processing. Soybean oil is also widely consumed in Nepal. 

Prior to this, refined palm oil was Nepal's main export item. However, soybean oil became the first-choice export item after India banned its import in the fiscal year 2077/78. Regardless of this, palm oil is being exported from Nepal after India lifted the ban on palm oil imports. At present, palm oil is the second largest export item. During this period, palm oil export amounted to Rs 14.78 billion.