MUMBAI/NEW DELHI (Reuters) – India has suspended 39 licences to import 452,303 tonnes of refined palm oil after a surge in duty-free purchases from neighbours such as Nepal and Bangladesh which are not key producers, government and trade sources told Reuters.

The suspension could reduce India’s palm oil imports in the next few months and pressure Malaysian palm oil futures, but could lift shipments of soyoil and sunflower oil.

“All these 39 licences for import of refined palm oil will be immediately put under suspension,” the government said in circular seen by Reuters on Monday.

India, the world’s biggest importer of edible oil, put refined palm oil and palmolein on a list of restricted items on Jan. 8, although New Delhi later issued licences to import refined palmolein.

Palm oil imports from Nepal jumped 314% to 189,078 tonnes in the fiscal year ending on March 31, while purchases from Bangladesh jumped 500%, the government said in the circular.

The shipments did not attract import tax as both nations are signatories, along with India, of the South Asian Free Trade Agreement (SAFTA) that created a free-trade zone in the region.

A rising flow of duty-free edible oils was disrupting trade in India and undermining government efforts to boost oilseed prices with higher import taxes, said Atul Chaturvedi, president of trade body the Solvent Extractors Association of India (SEA).

Of the suspended licences, 37 were issued to source the commodity from Bangladesh and Nepal, while two were issued for Indonesian origin, the government added.

Palm oil accounts for nearly two-thirds of India’s total imports of edible oil, mainly sourced from Indonesia and Malaysia.

Indian refiners have long opposed imports of refined palm oil, saying they hurt domestic refiners and oilseed growers.

The suspension is unlikely to cause a shortage of palm oil in Indian markets as consumption has fallen as much as 40% after a nationwide coronavirus lockdown, said Sudhakar Desai, president of the Indian Vegetable Oil Producers’ Association (IVPA).

India’s palm oil imports fell 46% in April from a year ago, provisional data from the SEA shows.

New Delhi received dozens of applications for licences to import refined palm oil after tweaking rules in April, said a government official, who declined to be identified as he was not allowed to speak to the media.

“The market has enough palm oil,” the official added. “We have decided not to allow any import of palm oil and not to give new licences.”