KATHMANDU, JULY 17

As the country's trade gap is still huge and the foreign exchange reserves is still not at a comfortable position, the government has decided to give continuity to the ban on import of non-essential items listed under 10 categories until August 30.

Issuing a notice on Nepal Gazette today, the Ministry of Industry, Commerce, and Supplies said that the restriction on the import of 'luxury' items, including edibles products such as snacks (chips, crackers, etcetera), all kinds of readymade beverages, cigarette and tobacco products, diamonds, coloured television sets (bigger than 32 inches), vehicles (jeep, car and vans, with exception of ambulances and hearse), all kinds of toys, and playing cards.

Moreover, the government has further tightened the import of two-wheelers and mobile phone sets this time. The ceiling for mobile phones has been lowered to $300 from $600 earlier. Moreover, vehicle distributors are not allowed to import two-wheelers of more than 150 cc. Earlier the cap had been set at 250 cc.

According to Dhurba Bahadur Thapa, chairperson of NADA Automobiles Association of Nepal, the highest selling two-wheelers in the country fall between the 150 cc and 250 cc category. 'While our business will be affected the government's decision will also dents its own revenue collection.'

As automobile dealers place their orders for the festive seasons of Dashain and Tihar around three months in advance, the import restrictions till August-end will impact festive sales as well, he said. 'Our sales in Dashain and Tihar normally constitute around 50 per cent of annual sales, but that might not be possible this year,' Thapa shared, adding that interested buyers may have to wait longer to receive the two-wheeler of their choice due to shortage.

He opined the government's move targeting the automobile sector seemed to be politically motivated and lacked any real rhyme or reason.

Deepak Malhotra, president of Mobile Phone Importers Association, said the market of mobile industry will shrink by 80 per cent due to the government's decision to restrict import of cellphones above $300.

'Firstly, it is senseless to categorise mobile phones under luxury items. And banning import of high-end handsets will only cause the grey market to flourish and impact the government's revenue collection,' Malhotra said.

Meanwhile, the notice had clarified that the ban will not be applicable to the companies that have completed the banking process prior to July 17.

Likewise, the international diplomatic missions based in Nepal can also procure the listed items for personal use.

In a bid to prop up the dwindling foreign exchange reserve of the country, the government had banned the import of these items on April 26.

The latest macroeconomic update unveiled by the Nepal Rastra Bank (NRB) recently revealed that the foreign exchange reserves has slumped 19.6 per cent from $11.75 billion in mid-July of 2021 over the 11 months of the last fiscal to stand at $9.45 billion in mid- June.

Based on the imports of 11 months of the last fiscal year, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 7.53 months, and merchandise and services imports of just 6.73 months, the central bank had said.

A version of this article appears in the print on July 18, 2022, of The Himalayan Times.