A day after India imposed restrictions on imports of refined palm oil in what was seen as a retaliatory move against Malaysia, the Indian Ministry of External Affairs said the options for Indian businesses to purchase the product from any other country remain open.

This effectively means that Nepali traders cannot export refined palm oil to India, but the Indian traders who have a special permit can buy the processed edible oil from Nepal.

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

Local traders said the Indian government statement provides relief to many panic-stricken Nepali manufacturers who were involved in importing crude palm oil and re-exporting the product after processing it here.

An estimated 50,000 tonnes of crude and processed palm oil products are currently stocked in different processing plants. But manufacturers and traders are wary of when the lucrative multi–million dollar palm oil trade, virtually closed since Thursday, would resume.

On January 8, India’s Directorate General of Foreign Trade issued a notification saying the foreign trade policy had been amended from “free” to “restricted” for refined palm oil trade.

Read: Processed edible oils become Nepal's top export

An official at the Indian Embassy in Nepal, who spoke to the Post on the condition of anonymity, on Friday, said that once a commodity is put in a “restricted” category, it would mean that the Indian importers will need to obtain a license to buy processed palm oil from Nepal. “The import licenses are given on a case-by-case basis.”

According to media reports, the Indian government’s restriction follows Malaysian Prime Minister Mahathir Mohamad’s criticism of New Delhi’s actions in Jammu and Kashmir and the country’s new citizenship law.

For Nepal, the restrictions could potentially wipe out its palm oil exports worth Rs22 billion or more annually, based on the current export figures.

According to the Trade and Export Promotion Centre, Nepal imported crude palm oil worth Rs9.94 billion and exported processed palm oil worth Rs11.5 billion in the first five months of the current fiscal year.

Exports of palm oil increased nearly eight times the amount shipped in the same period last year and commands a 24 percent share in Nepal’s total exports. Last year, Nepal exported processed palm oil, which is not produced in the country, worth Rs10.33 billion, to India.

The Indian foreign ministry spokesman, Raveesh Kumar told a weekly media briefing in New Delhi on Thursday that the decision surrounding palm oil was not country specific, but product specific.

“It does not mean that this has been put under prohibited list, this is under restricted category. So let us not jump to conclusions that due to this (decision), how the trade is going to be affected,” said Kumar, in response to a question by a media person.

“When you are looking at issues related to the import of any product from any country, there are basically two factors — one is a commercial decision and the other is defined by the trade policy," said Kumar.

Read: With the export of everything else falling, palm oil rises to the top

“In this case, it is defined by the trade policy. There are basically three categories under which you can import items – open, restricted and prohibited. This (palm oil) is not under prohibited category. So, why do you presume that this means that the imports will be stopped?," he said in response to another question.

Sandeep Agrawal, president of Nepal Vegetable Ghee and Oil Manufacturers Association, said that all exports to India have stopped completely since Thursday. “The (Nepal) government is making an effort to sort out things. We are hopeful that the problem will be resolved within a week.”

When asked if the new provision will benefit only few Indian buyers, Agrawal said, “I don’t think it will.”

Dinesh Bhattarai, spokesperson for the Ministry of Industry, Commerce and Supplies, said they held a meeting with the palm oil traders on Friday and asked them to give the details of all the products they are stocking.

“We are preparing internally. So far, we have not fixed a date to hold bilateral talks with India on this particular issue.”