Nepal’s export had crossed the Rs. 100 billion mark for the first time last year.
In the last Fiscal Year 2020/21, Nepal exported goods worth Rs. 141.1 billion while the size of export trade was Rs. 97.7 billion in FY 2019/20.
This celebration of success is massively backed by a new product that was not in the commercial scene until about a couple years ago – soyabean oil. Soyabean oil worth Rs. 53.65 billion last year, about a triple-fold growth from Rs. 18.3 billion in 2019/20.
According to the statistics of the Department of Customs (DoC), in 2018/19, export of soyabean oil stood at Rs. 2.3 billion.
In the same line of trade growth, soyabean oil took one-third share in the export business of Nepal this year with Rs. 30.55 billion exports in the first five months (mid-July to mid-December 2021). In the same period last year, such export amounted to Rs. 13.5 billion.
Soyabean oil has replaced palm oil, the largest export of last year with Rs. 18.31 billion export value. Palm oil is nowhere in the export scene this year. Nepal could export palm oil worth only a couple of million rupees. Its exports were disrupted after India included the product in its ‘restricted list’. The ban was lifted in July last year after about a year.
According to the industrialists, there is 25-30 per cent value addition to the imported raw materials of soyabean oil. Nepal produces a small amount of soyabean which is not sufficient for the production of the oil at industrial scale, so the exports are largely dependent on imported crude soyabean oil.
Likewise, there are concerns over
Indian attitude towards every Nepali product that records a high export growth. Palm oil is the recent example of Indian trade highhandedness. Producers of tea,
large cardamom, ginger, coffee and many other items in Nepal have been facing various non-tariff barriers from India while exporting the goods to India as well as to third countries.
Exports will continue to grow
Abinahs Bohra, Advisor of the Province 1 committee of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and its executive member, said that the export of soyabean oil will continue to grow in the years to come.
He also said that there were less chances of Indian disruption in the bilateral trade of the product. “India has a large consumer base of edible oil and there is a high demand of soyabean oil. Its export from Nepal is growing because current Indian production is insufficient to meet the market demand,” said Bohra who runs various food processing industries.
According to him, since India and Nepal should adhere to the rules of the South Asian Free Trade Area (SAFTA), Indians can’t impose a ban on soyabean oil until its import there reaches 5 per cent of its total import.
President of Nepal Chamber of Commerce, Rajendra Malla, said soyabean oil has supported export promotion. However, he said that creation of markets in third countries would ensure the sustainability of the product’s export. He said that increased export of the product would not do any harm to the economy.
Earning Indian currency
While Nepal does not have many products to export to India, soyabean oil is helping to earn Indian currency which is critical in the country’s international trade. Nepal’s 60-65 per cent international trade occurs with India alone. Since the country’s Indian currency reserve is insufficient to finance the imports, Nepal Rastra Bank has to sell foreign currencies like US Dollars to buy Indian currency.
Bohra said that the income of Indian currency will cushion the forex reserve and economy. The country will also benefit from the appreciation of dollar if its reserves could be preserved. Nepal needs about 800 billion Indian rupees to finance imports and pay wages to Indian workers in Nepal.
Chairman of FNCCI’s Export Promotion Committee, Manish Lal Pradhan, said that in any sense, the country must grab the opportunities unrolled by the creation of demand and adjustment in the international markets. “Both the government and private sector want exports to flourish. In Nepal’s Economic Transformation 2030 report, FNCCI has envisioned halving the trade deficit,” he said.
However, private sector lamented that the absence of accredited lab in Nepal has multiple repercussions for the export business. They are unable to export the goods like large cardamom and edible oil to the third countries due to the lack of internationally accredited laboratories.
Source : TRN,
