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Informist, Tuesday, Apr. 1, 2025

By Anjali Lavania

MUMBAI – The Central Board of Indirect Taxes and Customs has recently amended the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 in a bid to restrict the import of duty-free edible oil from countries like Nepal. A key revision replaces the word 'certificate' with 'proof' for commodities imported under concessional duty. The amendment, which has come into effect from Mar. 18, strengthens regulations on verifying the origin of imported goods, experts said.

"India has tightened its import regulations by replacing the term 'certificate of origin' with 'proof of origin' in trade agreements, aiming to curb misuse of duty benefits," said Indrajit Paul, head of research at Agrocorp International.

This move targets rerouted imports, particularly edible oils from Nepal, Singapore, Iraq, and Thailand, which had raised red flags, Paul said.

"This is to tighten scrutiny on imports especially from China via other nations. Many Chinese goods are shipped through the Association of Southeast Asian Nations nations, Sri Lanka, and the United Arab Emirates to avoid higher tariffs and trade restrictions," said Shailendra Soni, an edible oil trader at Dishan Overseas. 

In a letter to the government on Mar. 24, Solvent Extractors' Association of India President Sanjeev Asthana had said the massive influx of refined soyoil and palm oil from Nepal to India was severely impacting domestic refiners and oilseed farmers. The import of edible oil at zero duty under the South Asian Free Trade Area agreement from Nepal is creating havoc not only in northern and eastern India but is now spreading to southern and central India, the association had said in its letter.
 
"What began as a trickle has now reached alarming proportions. This is threatening the survival of the vegetable oil refining industry in these regions, distorting markets, and undermining the purpose of high import duties on edible oils," Asthana said in the letter. 
 
"Stricter scrutiny ensures only genuine free trade agreement beneficiaries get concessions, protecting domestic industries. While compliance costs may rise, this step promotes fair trade, prevents tariff evasion, and safeguards India's edible oil market from deceptive imports," Paul of Agrocorp International said.

"India as a country is importing at a fast pace not only edible oil but also other commodities which is ultimately hurting the domestic industries," B.V. Mehta, executive director at SEA said. 

"From the 'certificate of origin' the government has now moved to 'proof of origin' which has now become an additional requirement. Now exporters have to attach this too in the necessary documents required for trade. However, this will not stop the imports but definitely may reduce them," Mehta said.

According to Rajesh G. Patel, managing partner of GGN Research, Nepal's edible oils exports to Indian ports totalled 74,000 tonnes in February – 60,000 tonnes of soyoil, and 14,000 tonnes of sunflower oil. 

"This move may help the local traders, and farmers in the medium-term as domestic prices will be increased if the imports from Nepal are reduced," said Chayan Soni, commodity research analyst at Suguna Foods.  End

Edited by Saji George Titus

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