Nepal seeks early lifting of ban on export of refined palm oil to India

With India stopping importing refined palm oil from Nepal, the Himalayan nation's top export item, the government has formally asked New Delhi to revoke the ban, Nepal's Commerce and Supplies Secretary Baikuntha Aryal said on Friday.

Though the restriction was aimed at Malaysia, which criticised India's decisions on Kashmir and the new citizenship law, it has also hit Nepal.

Nepal had exported refined palm oil worth over Rs 11 billion to India in the first five months of this fiscal, making it the country's largest export item, Aryal told a group of Indian journalists here at the Ministry of Industry, Commerce and Supplies.

He said the Nepalese export of refined palm oil was "not disturbing" the Indian market.

Nepali traders have been exporting only in consumer packs of refined palm oil to India and Nepal is not a bulk exporter of the commodity.

"We're not bulk exporters," he said, noting that Nepal exports palm oil in small packages ranging from one kg to 15 kg, which are widely used by Indian households.

As a result of the Indian ban, a lot of the refined palm oil was piling up at border and at the factories in Nepal.

Aryal hoped that India would soon revoke the ban on the import of refined palm oil from Nepal and his ministry was in touch with its Indian counterpart to resolve the issue.

Though Nepal never had competitive or comparative advantage in exporting palm oil to India, rising export of the product in recent months had been playing a crucial role in raising the country's export base and narrow down the trade deficit, The Himalyan Times reported recently.

Nepali traders import crude palm oil from Malaysia and Indonesia, process and package it here, before sending it to India. Traders were lured towards this business as India had imposed a duty of 40 per cent on import of palm oil from Malaysia and Indonesia, the two largest producers of palm oil in the world.

Nepal's palm oil, on the other hand, was subject to a duty of just six per cent in India under the bilateral trade treaty, the report said.

Meanwhile, India's Petroleum Secretary K K Kutty held talks with Aryal here on Friday on bilateral cooperation in the oil and gas sector.

The meeting was the first since a Joint Working Group was established and both sides held the maiden meeting to enhance cooperation in the oil and gas sectors.

Prime Minister Narendra Modi and his Nepal counterpart K P Sharma Oli jointly inaugurated the Motihari-Amlekhgunj petroleum product pipeline, the first of its kind in South Asia in September 2019. Though it was aimed at pumping 300kl/hour, Nepal was getting half of this currently, Aryal said.

The Motihari-Amlekhgunj petroleum pipeline is envisaged to put in place a mechanism for assured, continuous and cost-effective supply of petroleum products to Nepal.

Presently, fuel products are being transported from India to Nepal by tankers and trucks, which are costly and time consuming.