India is the world’s largest importer of edible oils and continues to depend on imports to bridge the domestic demand-supply gap.
The Indian Vegetable Oil Producers’ Association (IVPA) has urged the Government to undertake an urgent policy review following the surge in duty-free refined edible oil imports from Nepal under the South Asian Free Trade Area (SAFTA) framework.Imports from Nepal have increased from 47,295 tonnes in 2023 to 1.24 lakh tonnes (lt) in 2024, before surging to over 8.04 lt in 2025, an increase of more than 17-fold within two years. Citing the prevailing trade trends, a media statement by IVPA said imports are expected to approach 1 million tonnes annually, making Nepal one of India’s largest suppliers of refined edible oils.IVPA said the sharp increase represents a significant structural shift in India’s edible oil trade and merits timely policy attention to ensure that India’s trade framework, tariff policy and domestic value-addition objectives continue to remain aligned.Need for policy reviewSudhakar Desai, President of IVPA, said: “India has consistently championed regional economic cooperation and remains fully committed to the objectives of the SAFTA agreement. However, the extraordinary pace and scale of duty-free refined edible oil imports call for a comprehensive policy review to ensure that preferential trade arrangements continue to promote genuine regional value addition while safeguarding the competitiveness of India’s domestic refining industry, supporting farmer welfare and strengthening the nation’s long-term edible oil security.”India is the world’s largest importer of edible oils and continues to depend on imports to bridge the domestic demand-supply gap. At the same time, successive policy measures have encouraged domestic refining so that value addition, investment, employment and economic activity remain within the country.IVPA noted that the rapid increase in duty-free imports of refined edible oils has altered this balance by shifting refining activity outside India while domestic refiners continue to import crude oils on payment of applicable customs duties and Agriculture Infrastructure and Development Cess (AIDC). The association said this has implications for refining capacity utilisation, future investments, manufacturing competitiveness and demand for domestically produced oilseeds, particularly soybean and mustard grown by millions of Indian farmers.It said that the rising volume of duty-free imports also has implications for government customs revenue, estimated by industry at ₹2,000-2,500 crore annually, while progressively transferring value addition outside India.Strengthen CAROTAR implementationRecognising the importance of preserving the integrity of India’s preferential trade framework, IVPA has requested the Government to undertake a detailed verification of compliance with the Rules of Origin prescribed under the SAFTA agreement through the existing customs framework, including the Customs Administration of Rules of Origin under Trade Agreements Rules, 2020 (CAROTAR). Given Nepal’s limited domestic availability of palm oil and soybean, IVPA believes such verification would help ensure that preferential tariff benefits are extended only to products that genuinely satisfy the prescribed origin requirements.“Our representation is not intended to restrict legitimate bilateral trade with Nepal or dilute India’s international commitments. It seeks to preserve the integrity of India’s trade agreements by ensuring that preferential tariff benefits accrue only to products genuinely qualifying under the Rules of Origin, while maintaining a level-playing field for Indian industry and protecting domestic value addition,” Desai said.In its representation, IVPA has requested the Government to examine verification of Rules of Origin under the SAFTA framework through strengthened implementation of CAROTAR. It sought a review of the existing tariff structure to ensure continued support for domestic value addition.IVPA reiterated that India’s long-term edible oil security depends not only on assured access to imports but also on preserving a globally competitive domestic refining industry that supports farmers, generates employment, strengthens manufacturing and builds resilient supply chains.IVPA expressed confidence that an appropriate policy review would reinforce the objectives of ‘Aatmanirbhar Bharat’, strengthen India’s edible oil ecosystem and preserve the credibility of the country’s preferential trade agreements.Published on July 20, 2026
