KATHMANDU, JULY 26

The government's decision to ban import of liquor has increased its smuggling and dented the tax revenue, according to the Liquor Importers Association of Nepal (LIAN).

Organising a press meet here today, the LIAN has claimed that large quantities of popular international branded liquors are being smuggled across the border from India.

Stating the country's trade gap is still huge and the foreign exchange reserves is not yet in a comfortable position, the government on July 17 had decided to give continuity to the ban on import of non-essential items listed under 10 categories until August 30.

There will be adverse effects on the country's economy if the ban on import of alcoholic beverages is not lifted immediately, warned the President of LIAN, Anil Agrawal.

As per LIAN, import of bottled liquor totals around $12 million annually, which accounts for about 0.10 per cent of the total foreign currency outflow in a year.

Meanwhile, the revenue generated for the government through imported alcoholic beverages is about Rs 3.3 billion, which more than covers the small dent made in the forex reserves, Agrawal argued.

Meanwhile, Narayan Prasad Regmi, spokesperson for the Ministry of Industry, Commerce and Supplies, said that the government has extended the import ban on luxury items, including liquor, as the country's forex reserves is still under pressure.

'The banned items are categorised under 'nonessential' which do not impact the public's daily life,' Regmi told The Himalayan Times.

However, according to Agrawal, counterfeit foreign liquor is already quite readily available in the local market these days, which could have adverse impact on the public health.

The import ban on liquor is also having a negative impact on the tourism sector because the hotels, restaurants and bars are losing revenue, he said.

'Tourists visiting Nepal might prefer imported liquor, but because of the ban, the tourist service providers are unable to cater to their demand,' he said.

'Not only will this give off a negative message, the tourism sector could be forced to lay off or furlough staff as the ban has dented their income.'

According to LIAN, the outflow of foreign currency in the import of liquor is on an average about $15 per litre while the revenue generated from its sale through the hotels, restaurants and bars is $120 per litre, which is eight times the outflow.

But MoICS Spokesperson Regmi said he was not aware of any impact on the hospitality sector due to the ban on import of foreign liquor. 'If such is the case, the representatives of the concerned sector can contact the ministry.'

Meanwhile, Agrawal further stated that there is a huge difference in the retail price of liquor in Nepal and bordering states of India because of higher duties and excise in Nepal.

'Due to this, import of alcoholic beverages through illegal channels is quite widespread,' he said, urging the government to seriously look into the matter as it is not only affecting the business of liquor traders, but also hurting revenue collection.

A version of this article appears in the print on July 27, 2022, of The Himalayan Times.