The Solvent Extractors’ Association of India (SEA) urges the Centre to regulate duty-free imports of refined edible oils from Nepal under SAFTA. Nepal’s exploitation of SAFTA norms harms Indian refiners, disrupts the domestic market, and prevents fair demand for Indian oilseeds. SEA calls for stricter measures, including import quotas and renegotiation of SAFTA terms.
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Solvent Extractors’ Association of India (SEA) urges Centre to regulate edible oil imports from Nepal due to misuse of SAFTA norms.
Nepal allows the import of crude edible oils at zero duty.
Refiners in Nepal process these oils and export the refined products to India under the South Asian Free Trade Area (SAFTA) agreement, which permits duty-free trade among SAARC countries.
This gives Nepalese refiners a cost advantage over Indian refiners, who face higher import duties on crude oils.
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SAFTA is an agreement between countries in South Asia to make trade easier between them. The agreement was signed in 2004 and came into force in 2006. It removes trade barriers like tariffs, para tariffs, and non-tariff restrictions. It promotes the free movement of goods, services, and investment. It includes a dispute settlement mechanism. It includes a SAFTA Certificate that gives benefits to traders. |
Solvent Extractors’ Association of India (SEA) raised concern that Nepalese refiners are exploiting the SAFTA agreement by importing crude edible oils at zero duty, refining them, and exporting the refined oils to India at discounted rates.
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The Solvent Extractors' Association of India is the apex body of the solvent extraction industry in India. It has about 835 members – manufacturers and exporters. They process oilcakes, soybeans and other oilseeds and rice bran in their modern solvent extraction plants. |
The influx of duty-free refined oils from Nepal is distorting India’s edible oil market.
It is harming domestic refiners, reducing demand for Indian oilseeds, and negatively impacting farmers.
The government is losing revenue due to the duty-free imports under SAFTA.
Between October 15, 2024, and January 15, 2025, Nepal imported 1.94 lakh tonnes of crude edible oils and exported 1.07 lakh tonnes of refined oils to India.
Market sources estimate that 50,000 to 60,000 tonnes of refined oil per month could flow into India from Nepal due to the duty advantage under SAFTA.
Suspend duty-free imports of edible oils under SAFTA when oilseeds and oils are not produced in the exporting country.
Renegotiate SAFTA terms for agro-commodity imports.
Impose a minimum import price (MIP) based on the cost of oil production in India.
Restrict duty-free imports or channel them through public sector undertakings like NAFED.
Fix quotas for refined oil imports from Nepal.
The Rules of Origin under SAFTA require that goods must be substantially produced or processed in the exporting country to qualify for duty-free trade.
SEA claims that the refined oils imported from Nepal do not meet these rules, as they are made from crude oils sourced from non-SAFTA countries.
The influx of cheap refined oils from Nepal reduces demand for domestically produced oilseeds, which distorts the market and undermines the government’s efforts to support farmers through measures like minimum support prices (MSP) for oilseeds.
Monitoring and regulating the import of sensitive agro-commodities like edible oils.
Preventing non-SAFTA countries from using SAFTA provisions to dump goods in India.
Implementing provisional safeguard measures to protect Indian farmers and the economy.
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PRACTICE QUESTION Q. To what extent do Free Trade Agreements (FTAs) lead to the dumping of foreign goods in India's domestic market? Suggest policy measures to counter this. 250 words |
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