Processed soybean oil and palm oil have knocked juice, jam and footwear off the list of largest exports to India.

According to statistics issued by the Birgunj Customs Office, soybean and palm oil shipments in the first five months of the fiscal year were worth Rs8.58 billion.

Read: Nepal doesn’t grow any palm. Here’s how it still exported billions worth of palm oil

Exports of palm oil, which is not produced domestically, have increased exponentially over the past year.

In the previous year, the customs office recorded Rs2.4 billion worth of exports of edible oils in the first five months.

According to Bimal Shah, information officer of the Birgunj Customs Office, traders began exporting processed oils from the last fiscal year after India relaxed its provisions on importing soybean and palm oils.

Nepal does not produce any soybean or palm oil, and traders import crude oils from Brazil, Argentina, Ukraine, Indonesia, Australia and other countries which they process and export to India without paying a penny in tariffs.

Under the South Asian Free Trade Area (SAFTA) agreement, zero tariffs are levied on goods exported from underdeveloped countries like Nepal, and Nepali traders have been importing crude palm oil from third countries by paying minimum customs duty, and then exporting the finished product to India free of customs duty.

“It the oils were imported for domestic consumption, the traders would have to pay 10 percent customs duty and 13 percent value-added tax; but in the case of exports to India, no tariffs are levied,” said Shah.

In the process of importing, refining and exporting palm oil, there is no value addition to the product, resulting in little benefit to the state.

As per officials, the first four digits out of the eight-digit Harmonised System (HS) code should be different to prove that there is high-value addition to the raw material.

Records from the Department of Customs show that crude palm oil has been assigned an HS code of 15111000 while the code for refined palm oil is 15119000.

The country’s total exports in the first five months of the current fiscal year increased by 26 percent year-on-year to Rs47.6 billion from Rs37.5 billion. Palm oil and soybean oil shipments accounted for more than 30 percent of the total exports, shows customs data.

Imports slipped down by 4 percent to Rs581 billion from Rs606 billion in the first five months of the last fiscal year.