Soya oil from Nepal flouts norms, alleges SEA

The Solvent Extractors’ Association (SEA) of India has complained to the Centre, alleging that massive quantities of soyabean oil are being imported via Nepal, flouting the Rules of Origin norms.

In a letter to Piyush Goyal, Union Minister of Consumer Affairs, Food and Public Distribution and Minister of Commerce and Industry, and Narendra Singh Tomar, Union Minister of Agriculture and Farmers Welfare, SEA President Atul Chaturvedi said that there has been a massive influx of soybean oil from Nepal into India flouting Rules of Origins which means soya oil would have to be produced in that country. This is hurting domestic refiners, farmers, and incurring loss of revenue to the Government, he said, urging the Centre to regulate the inflow of edible oil.

He said that goods exported to India by five least developed SAARC countries are fully exempt from Customs Duty vide notification dated November 9, 2011. Taking advantage of this exemption, palm oil and soybean oil imports have started from Nepal and Bangladesh at zero duty in substantial quantities.

Nepal does not grow soybean and has a minimal capacity for crushing imported bean. Also, it does not produce any palm oil.

Violation of rules

He said the palmolein being imported from Nepal to India is of Indonesian and Malaysian origin, and soybean oil is of South American origin. These are routed through Nepal or Bangladesh by flouting the Rules of Origin for getting the duty exemption for such imports.

Though the Union Finance Ministry had issued a notification in August 2020 imposing strict regulation, to check misuse of Rules of Origin, still soybean oil is entering India at nil duty, flouting the rules, he said.

The current import duty, including cess, on refined palmolein and soya refined, is 49.5 per cent. This means India is losing a revenue of around ₹54,000 a tonne of refined soybean oil and around ₹44,500 a tonne on palm oil for each tonne of these oils coming via Nepal, he said.

Quoting import data, the letter to the Ministers said that Nepal exported 95,000 tonnes of refined soyoil and 1,69,000 tonnes of RBD pamolein during July 2019 to June 2020. In addition, Nepal had imported 2,00,000 tonnes of crude soy oil and 2,40,000 tonnes of crude palm oil during that period.

Nepal imports to India

The letter said that Nepal exported 2,15,000 tonnes of refined soy oil and 3,000 tonnes of RBD pamolein to India from June 2020 to April 2021. Nepal had imported 3,50,000 tonnes of crude soy oil and 60,000 tonnes of crude palm oil during that period.

The letter highlighted that the country might lose revenue of over ₹1,200 crore for an import of average 2,50,000 tonnes of soybean oil and palm oil per annum from Nepal.

He said in the letter that the excessive import of refined soybean oil and RBD palmolein at nil duty under the SAFTA agreement is seriously hurting the domestic refiners, particularly in eastern and northern India.

SEA letter suggested measures to the Government such as strict monitoring of Rules of Origin and channelizing the import through a public sector undertaking.

“If it is not possible to stop the import under SAFTA agreement, please fix the quota for import of refined oils from Nepal and distribute it month-wise and region-wise so that particular region has minimum impact,” he said in the letter.

What started as a trickle in the beginning has now assumed alarming proportions. It is threatening the very survival of the vegetable oil refining industry in eastern and northern India and resulting in huge revenue loss to the Centre, he said. Apart from these losses, it is harming the interests of oilseed farmers as it distorts the domestic markets. Thus, the very purpose of keeping import duties on edible oils is getting negated, he added.

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