Nepal’s export revenue has increased by 16.5% due to an increase in edible oil exports

The figure increased 16.54 percent in the first five months of the current fiscal year (FY) compared to the export earnings in the same period of last FY, marking a 38-month high increase in Nepal’s export earnings.

The nation exported commodities valued at Rs 73.65 billion between mid-July and mid-December of this year, up from Rs 63.20 billion during the same period in FY 2023–2024. According to Department of Customs (DoC) figures, the nation’s imports also increased by 3% to Rs 661.48 billion.

Nepal’s economy has been slowing down for the past few years, and both imports and exports have significantly decreased. Analysts contend that a rise in foreign trade indicates a fictitious improvement in the nation’s economic activity.

The nation’s export growth was negative 6% till October of current year. However, the number increased significantly during the last two months, mostly as a result of the nation’s booming edible oil exports.

The substantial increase in the export of refined edible oil is the reason for the noteworthy increase in the nation’s overall exports. The DoC reports that during the review period, Nepal’s exports of palm, sunflower, and soybean oils brought in Rs 12.19 billion.

For around four years, until FY 2021/22, Nepal earned a substantial amount of money exporting these three edible oils to India, totaling Rs 93.69 billion. But in 2022–2023, the amount fell to Rs 29.42 billion, and it has been falling ever since.

These oils were previously exported to India by Nepali traders using a provision in the South Asian Free Trade Area (SAFTA). Nepali businessmen had been acquiring crude palm oil from other nations at minimum tariffs and then exporting the final product to India with zero tariffs because the SAFTA agreement allowed for zero tariffs on commodities exported from developing nations. This opportunity is offered by India to Nepali products with at least 30% domestic value addition.

Over the last two years, Nepal’s exports have drastically decreased since the southern neighbor lowered the import taxes on the raw materials of these edible oils that are imported from third nations. After India raised the duty on raw materials imported from third countries, edible oil shipments began to peak once more, according to Kumud Kumar Dugad, head of the Nepal Rice, Oil and Pulses Industries Association.

India, Cyprus, Italy, Turkey, and Ukraine are the countries from which Nepal buys its raw soybeans. Similarly, Indonesia, Thailand, and Malaysia are the importers of crude palm oil. The nations that provide the raw materials for sunflower oil include Romania, Italy, and Ukraine. After being processed in Nepal, the goods are shipped to the neighbor to the south.

In the first five months of the current fiscal year, Nepal exported tea and coffee valued at Rs 6.77 billion, according to the DoC. Similarly, during the review period, the nation exported Rs 5.69 billion worth of handmade staple fiber, Rs 5.48 billion worth of woolen carpet, Rs 5.08 billion worth of iron and steel, and Rs 3.84 billion worth of wooden products.