The Minister of State for Industry, Commerce and Supplies, Motilal Dugad said on Monday he expects India to soon lift its ban on the import of refined palm oil from Nepal.

Dugad, who is currently in New Delhi to take part in the Global Business Summit, met with India’s Minister of State for Commerce & Industry, Hardeep Singh Puri earlier in the day.

He said following his discussions with Puri, he is hopeful that India will resume its imports soon.

"Minister Puri said they were concerned over the ban affecting Nepal's exports and (they) have directed to resume imports soon," Dugad told the Kantipur daily.

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

On January 8, India imposed restrictions on the imports of refined palm oil, affecting Nepal's largest export commodity. The move to ban the import of refined palm oil was seen as a retaliation against Malaysia, which had criticised New Delhi’s actions on Jammu and Kashmir and its new citizenship law.

The repercussions of that Indian government decision is being felt in Nepal.

Nepal imports crude palm, refines it and then re-exports the processed palm oil to India, its sole buyer. The local traders import the crude palm oil shipments primarily from Indonesia, followed by Argentina, Malaysia and Singapore.

India’s restrictions could potentially wipe out Nepali exports worth nearly Rs22 billion a year, based on the country’s current export figures.

Following India’s decision, Nepal requested India to lift its import ban on refined palm oil originating from Nepal. The Indian side responded by providing special permits to their traders to import from Nepal, but later backtracked on its decision.

Following Nepal's lobbying to resume imports, Indian traders met and requested their Minister of Railways and Commerce & Industry, Piyush Goyal not to provide zero import tariffs on palm oil to Nepal as that would hit India’s own domestic processing industries.

The Nepali traders have been taking advantage of the South Asian Free Trade Area (SAFTA) agreement, which provisions zero tariffs on goods exported from underdeveloped countries like Nepal.