- The commodity tops the list of items Nepal exports to India
- In first four months of this fiscal oil worth Rs 8.36 bn was exported
Kathmandu, January 9
In a blow to palm oil exporters, India has stopped importing refined palm oil from Nepal, the country’s top export item, generating fears that the already burgeoning trade deficit could widen further.
India’s Directorate General of Foreign Trade yesterday issued a notification stating a complete restriction on import of refined bleached deodorised palm oil and refined bleached deodorised palmolein. The restriction was aimed at taming Malaysia, whose Prime Minister Mahathir Mohamad had recently criticised the Indian government’s actions in the Kashmir region and its new citizenship law. This restriction also affects Nepal, which had exported refined palm oil worth Rs 8.36 billion to India in the first four months of this fiscal, making it the country’s largest export item.
“Indian customs office today prevented Nepali traders from exporting the product to India citing directive from higher authorities,” said Nabaraj Dhakal, joint secretary and spokesperson for the Ministry of Industry, Commerce and Supplies.
If the restriction continues, Nepal’s trade deficit, which has already reached an alarming level, will widen further, hitting current account and balance of payments. Nepal’s trade deficit stood at Rs 414.02 billion in the first four months of this fiscal, according to Nepal Rastra Bank. This pushed the current account to a negative of Rs 37.3 billion in the aforementioned period. A widening current account deficit causes the foreign exchange reserves to shrink, leaving a net importing country like Nepal with fewer foreign currencies to finance imports.
“We have already discussed this matter with Indian officials over phone. They are positive about exempting Nepal. Meanwhile, Indian officials said they would discuss the issue in detail with Nepal after getting the notification from DGFT and studying it,” said Dhakal, urging Nepali exporters of palm oil ‘not to worry’.
“The restriction targets Malaysia and it shouldn’t affect Nepal.”