MUMBAI - India's top vegetable oil trade body called on Tuesday for the government to close a South Asian regional free-trade pact loophole it said had been used to circumvent tax by re-routing palm oil and soyoil imports through Nepal and Bangladesh.
The Solvent Extractors' Association of India said some traders were sourcing palm oil and soyoil from Nepal and Bangladesh under the South Asian Free Trade Agreement (SAFTA), even though both rely on imports from other countries.
"The palmolein being imported from Nepal is of Indonesian and Malaysian origin and soybean oil is of South American origin, routed through Nepal or Bangaldesh ... for getting the duty exemption for such imports," it said in a statement.
India charges 50% tax on refined palm oil and 45% on refined soyoil and another 10% surcharge on the duty.
Nepal imported 54,076 tonnes of palm oil from July to August and exported 35,706 tonnes to India during the period, the trade body said, citing import data as evidence.
The re-routing is leading to a monthly government revenue loss of 500 million Indian rupees ($7 million) and also hurting refiners in the north-eastern part of India, it added.
India's trade ministry did not immediately respond to a request for comment.
Palm oil accounts for nearly two-thirds of India's total edible oil imports. India buys palm oil from Indonesia and Malaysia, with its soyoil mainly imported from Argentina and Brazil. It purchases sunflower oil from Ukraine.
($1 = 70.9975 Indian rupees)
(Reporting by Rajendra Jadhav; Editing by Alexander Smith)