Kathmandu: The Nepal government says that all exports of palm oil to India have stopped since the Indian Directorate General of Foreign Trade (DGFT) issued a notification earlier this month, imposing restrictions on imports of refined palm oil with the aim to shut out Malaysia.

On January 8, DGFT issued a notification that foreign trade policy has been amended to bring three categories under refined palm oil from “free” to “restricted”. An importer has to obtain licence on a case-to-case basis once a commodity is listed under the “restricted” category.

In the last two years, refined palm oil had shot up to the top of Nepal’s export list. Several factories have been set up to repackage oil to get greater access to the Indian market on the face of the South Asia Free Trade Agreement (SAFTA).

Giving details of the importance of palm oil to Nepal, Nepalese commerce secretary Baikuntha Aryal said that in the first five months of the fiscal year, refined palm oil contributed to “30% of total exports”.

Also read: ‘Impartial and Neutral’ Nepal Ready to ‘Play Role of Mediator’ Between India and Pak

Nepal’s fiscal year begins from mid-July.

“If you convert this to Nepalese currency, this means that palm oil exports were worth for over 11.5 billion Nepali rupees (over $100 million),” Aryal told a visiting group of Indian journalists in his office on Friday.

India has publicly claimed that the DGFT notification is “not country-specific”. However, the MEA spokesperson had then said that Indian businesses always factor in the state of bilateral relationship when importing products.

With India maintaining that relations with Malaysia are in doldrums, the spokesperson’s comments provided a strong signal about the objective of the DGFT notification. India has been deeply unhappy over Malaysian prime minister Mahathir Mohammed’s critical words on India’s actions in Kashmir and the passage of the Citizenship Amendment Act.

The Nepalese commerce secretary said that since any impact on palm oil exports would affect Nepal’s total export volume, there has been constant talks with New Delhi to obtain some clarity.

“For this purpose, we had started dialogue with the Indian counterpart that if there was any concern regarding our refined palmolein oil, we would be okay to sort those things out,” said Aryal.

He stated that since the change of rules by India, all exports of palm oil from Nepal has been halted. “Once the notification was issued, then everything stopped”.

Aryal noted that Nepal had not been informed beforehand or consulted before the notification.

“We only came to know in the evening. We initiated some informal contacts, talked to the Indian embassy…and I also spoke to my counterpart”.

However, he revealed that so far there has been no clarification from India on the way forward in the import licence application process.

“We don’t have any correspondence in this issue…we should know how importers should get the licence from the competent authority over there. If we know that, we can ask our exporters to comply and fulfil all the procedures.”

Aryal added that Nepal palm oil exports had “enough value addition in line with SAFTA” and that “our refineries are quality and efficient”.

Earlier, president of Nepal Vegetable Ghee and Oil Manufacturers Association, Sandeep Agrawal had told The Wire that contracts for supply of 25,000 and 30,000 tonnes of palm oil were pending when the notification was issued.