June 9: The data on refined oil exports shows weak status of Nepal's exports. The export of edible oil from Birgunj, the country's main trade port, has almost come to a standstill this year, but this item remains at the top of the export list.
No other item has surpassed edible oil as the top export product of Nepal, although its export has slumped in terms of volume of export.
According to the data kept by the Birgunj Customs Office on its website, refined oil ranks first among the list of items exported in the ten months of the current fiscal year (FY 2022/23).
Refined soybean oil ranks first in the export list, followed by palm oil and sunflower oil in the third and fourth places respectively. In the second place of the export list is fruit juice. Dabur Nepal, a multinational company with Indian investment that operates near Birgunj, mainly exports fruit juice from Birgunj.
Hari Gautam, senior vice president of Birgunj Chamber of Commerce and Industry, said that even though the value and quantity of exports have decreased slightly due to the inability to prepare alternative products to be exported from Nepal, oil is at the forefront of export list.
"We did not pay attention to the actual export. In the name of export, it was just a matter of taking advantage of the difference in customs duties,” said Gautam, adding, “Industries with the purpose of bringing raw materials from outside and exporting to India have become dependent on the Indian policy.”
Oil producers who exported well until the previous year are now in a situation where they cannot afford to meet the expenses.
Until some time ago, India imposed a customs duty of up to 40 percent on oil imports, while Nepal had only a 10 percent duty on the import of raw materials used to prepare oil. It would also be returned after export under government subsidy. Under the SAFTA facility, Nepali oil producers were able to export refined oil to India at zero to 5 per cent duty.
India adopted a zero customs policy on oil imports to control prices after the price of food grains rose amid the Covid-19 pandemic and the Russia-Ukraine war.
According to Suresh Rungta, owner of OCB Food, the export from Nepal has decreased due to the effect of India’s customs policy. Birgunj is the main point of export of refined cooking oil. Fourteen industries were exporting edible oil through this channel.
Currently, oil production has decreased significantly. Soybean oil worth Rs 30 million has been exported from Birganj until mid-June of the current fiscal year. The value of export was Rs 1.21 billion during the corresponding period of the previous year. The data of Birgunj Customs shows that the export of refined palm oil has reduced by Rs 60 million, and the export value of sunflower oil has also halved.