KATHMANDU, OCTOBER 13

With the government's ban on the import of automobiles, mobile phones, liquor, and motorcycles set to expire on October 14, traders have their fingers crossed that the restrictions will not be extended again.

In a bid to prop up the country's depleting foreign exchange reserves, the government has banned the import of 10 non-essential items.

Issuing a notice in Nepal Gazette on April 26, the Ministry of Industry, Commerce, and Supplies announced that the import of 'luxury' items had been banned till July, which was then extended till August. Along with all types of alcohol and tobacco products, large-engine motorcycles, and mobile phones costing over $600, the ban also forbade the import of toys, playing cards, and diamonds.

Although the government had lifted the ban for certain items at the end of August, the ban was still enforced for imports of expensive mobile phones, automobiles, motorcycles, and liquor till October 14.

Sunil Rijal, vice-president of NADA Automobiles Association of Nepal, said that he is hopeful of the ban being lifted. 'The import ban has not only affected businesses but the government as well due to low generation of revenue.

The improvement in the country's forex reserves and the loss of revenue could prompt lifting of the restrictions, but it is up to the government to decide,' he said.

According to him, businesses have incurred massive losses this year due to the import restrictions.

'The ban has affected importers, showrooms, spare part traders, as well as tyres traders. Moreover, the liquidity crunch in the country and the refusal of banks to disperse loans have further affected sales. This has affected other businesses and industries from other sectors as well,' Rijal added.

As per Resham Thapa, economist and associate professor at the Central Department of Economics of the Tribhuvan University, the government could lift the import ban as the country's forex reserves have now improved to cover the import costs of at least seven months.

'Earlier, the government had imposed restrictions on imports of certain items following the imbalance in our external sector that led to country's foreign exchange reserves depleting to risky levels.

However, with improvements in tourism and remittance, the country's forex reserves has also increased over time. Looking at the current macroeconomic indicators, we can say that we are at a comfortable position and the restrictions on imports for certain commodities can be lifted for now,' he said.

Thapa also said that while the restrictions on imports helped in improving the country's forex reserves, it also affected the economic activities related to trade in certain technical ways. 'The ban on imports of automobiles affected the country's fuel consumption, workshops, and the revenue collected by the government, among other economic activities.

Thus, lifting the ban now can assist in recovering some of the lost economic activities,' he added.

Meanwhile, an official of the Department of Commerce, Supplies and Consumer Protection said that the Ministry of Industry, Commerce and Supplies is working towards coming up with a decision regarding the import restrictions.

The ministry officials, however, could not be reached for a comment despite repeated calls.

A version of this article appears in the print on October 14, 2022 of The Himalayan Times.