The export of processed edible oil to India through Birgunj customs crossed Rs32 billion in the first four months of the current fiscal year.

According to the customs office, soybean oil topped the export lists.

More than 75,900 tonnes of processed soybean oil worth Rs17.2 billion has been exported to India, followed by 70,600 tonnes of palm oil worth Rs13.4 billion.

Similarly, 7,953 tonnes of sunflower oil worth Rs1.58 billion were exported.

“Nepali traders have been importing crude palm, soybean and sunflower oil from various countries. After processing, they reexport the oil,” said Dhanbahadur Baruwal, chief of Birgunj customs office.

Nepal does not produce a drop of palm oil and the production of soybean and sunflower are negligible.

Despite that, import of edible oil has been making records each passing year as ingenious Nepali traders are taking advantage of the South Asian Free Trade Area (SAFTA), according to government officials.

In the last fiscal year, Nepal saw a 23 percent year-on-year jump in agricultural imports. The import bill soared mainly due to increased purchases of edible oil, particularly soybean oil.

In just one year, imports of edible oil swelled from Rs82.90 billion to Rs120.46 billion, with crude palm and soybean oil imports rising to nearly Rs100 billion.

India has been raising concerns about Nepal’s trade policy which allows import and export under a duty-free quota system.

Last year, the Solvent Extractors Association of India had written to the Indian central government claiming that palm oil and soybean oil originating from various countries were being routed to India through Nepal to take advantage of the zero duty privilege granted to Nepali exports.

As the South Asian Free Trade Area (SAFTA) agreement provisions zero tariffs on goods exported from underdeveloped countries like Nepal, Nepali traders have been importing crude soybean and palm oil from other countries paying minimum tariffs and then re-exporting the finished product to India with zero tariffs.

Trade experts say that importing crude oil with zero tariff privilege and re-exporting it to India with zero traffic privilege enables Nepali traders to enjoy a net profit of 45 percent, excluding other profits.