The surge narrowed Nepal’s trade deficit with India but pressured edible oil prices in border regions, making it harder for Indian refiners paying import duties to compete with cheaper supplies.
India imported a record 694,153 metric tons of soyoil from Nepal in 2025, up from 65,138 tons a year ago, according to data compiled by India’s Ministry of Commerce and Industry.
The world’s largest importer of vegetable oils raised import duty on refined soyoil to 35.75% in September 2024 from 13.75% previously.
The hike prompted Nepali refiners to boost imports of crude soyoil from Brazil and Argentina, process it locally, and ship the refined oil into India duty-free under the South Asian Free Trade Agreement (SAFTA).
Soyoil exports worth over $1 billion helped Nepal double its total goods exports to India to $2 billion in 2025 from a year earlier.
Nepal’s share of India’s 5.6 million-ton soyoil imports rose to 12.3% in 2025, making it the third-largest exporter after Argentina and Brazil.The country exports around 60,000 to 70,000 tons of soybean oil to India, and shipments could rise slightly in 2026 as two to three new refineries become operational, said Vikkas Dugar, managing director of Nepalese refiner Swastik Oil Industries.
“Nepal is landlocked, so we first import crude soyoil through Haldia Port in India, transport it by land to refineries, and then send the refined oil back to India. This adds significant costs,” said Dugar.
Refined soyoil from Nepal is slightly cheaper than locally processed Indian oil due to the duty differential, he said.
Indian refiners, however, argue that Nepali supplies are disrupting domestic prices.
While Nepali exports enter duty-free, Indian refiners must pay a 16.5% import duty on crude soyoil, effectively making their own supplies more expensive and less competitive, said B V Mehta, executive director of The Solvent Extractors’ Association of India.
“India needs to import edible oils to meet a shortfall in local production. Nepal’s duty advantage is now diverting soybean oil through the Himalayan nation rather than allowing it to arrive directly from Argentina and Brazil,” said Mehta.