Kathmandu, October 24

Citing that the government overlooked the concerns raised by textile entrepreneurs, domestic textile manufacturers have warned of shutting their businesses across the country from November 1.

A recent meeting of the Nepal Textile Industries Association (NTIA) has decided to shut all textile factories from next week if the government fails to address their issues, informed Sailendra Pradhan, president of the association.

Textile manufacturers are especially against the cancellation of the Value Added Tax (VAT) refund system in textile, which came into effect from this fiscal, stating that the decision has further deteriorated the competitiveness of Nepali textiles in the domestic as well as international markets. They had repeatedly urged the government, particularly the Ministry of Finance (MoF), to review its decision. However, since the government has shown no signs of addressing the aforementioned issue textile manufacturers have threatened to shut down their businesses.

The textile manufacturers had been enjoying 70 per cent VAT refund until last fiscal year but the government had scrapped such provision through the budget speech for 2018-19 fiscal year.

“Amid Nepali textile products already facing a hard time to compete with foreign textiles, cancelling VAT rebate system in the sector has further hit the competitiveness of Nepali textiles,” informed Pradhan, adding that though MoF had earlier provided assurance to resolve the problems being faced by textile manufacturers, it has not done anything substantial till date.

The Finance Ministry had formed a committee on July 31 to look into concerns raised by textile manufacturers. The committee was given the mandate to look into problems plaguing the domestic textile industry and come up with effective suggestions for the government. However, Pradhan said that the committee had not been able to accomplish its task within the stipulated time and textile manufacturers had thus decided to warn the government of closing their businesses.

As per Pradhan, the government should either review its decision regarding the cancellation of VAT rebate on textile or pay back the equivalent amount to textile manufacturers through any other means.

Similarly, textile manufacturers have also urged the government to curb the illegal import of foreign textile products worth billions of rupees in domestic market.

Meanwhile, officials at the Finance Ministry said that necessary decisions will be taken on the basis of the recommendation of the committee. “However, the industry minister should also look into the issues raised by textile manufacturers and suggest MoF for further actions,” opined an MoF official.