Nepal has always been culturally and economically close to India, however in recent years as the Communist regime assumed power, it has been appeasing its Chinese masters and moving away from its most important neighbour. Now as India has decided to restrict the import of refined palm oil, Nepal has come back to its senses and realized that offending India is not a good tactic for the Himalayan nation.

Nepal and Indonesia said they were studying India’s decision to restrict import of palm oil products, which understandably is aimed at Malaysia. The diplomatic comments poured in as the Commerce Ministry sources clarified that the restriction of palm oil is not meant for a single country but aimed at the product itself.

Notably, 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 has 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 PM Mahathir Mohamad has been on a campaign to defame India.

Confirming the development, Nabaraj Dhakal, joint secretary and spokesperson for the Ministry of Industry, Commerce and Supplies said, “Indian customs office today prevented Nepali traders from exporting the product to India citing directive from higher authorities.” The reason behind Nepal’s sudden awakening is its sinking economy and palm oil is a major component of it. It 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. 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.

Nepal has been mesmerized by the alluring Chinese investments hence it was maintaining a distance from its oldest ally however after this restriction it has realized that India has to be dealt with utmost sensitivity. The Communist government of Nepal had recently hit out at India by protesting against India for including Kalapani area at the tri junction of Nepal, India and Tibet. “India should immediately withdraw its army from there” said the Nepal Prime Minister K P Oli. The communist regime of Nepal must realize the consequences of hurting its southern neighbour, the most crucial economy of the region.