Kathmandu, January 6

The export of jute products from Nepal to India has been halted for more than three weeks after the Indian government imposed excise duty of 12.5 per cent on different jute products.

Though the Indian government had released a notification to levy excise duty on jute products from Nepal, Sri Lanka and the Maldives in 2015, it only started enforcing the notification from December 15 last year, according to jute traders. Following the enforcement of the excise duty, Nepali traders say that jute export to the southern neighbour has halted completely.

India is Nepal’s largest importer of jute products. As per traders, more than 90 per cent of Nepali jute products are exported to the Indian market.

“India has started enforcing excise duty on different jute products like jute sacks and hessian jute fabric since December 15, which is against the Nepal-India Trade Treaty, which guarantees duty-free access to Nepali products in the Indian market,” said Raj Kumar Golchha, president of Nepal Jute Industries Association.

According to Golchha, India, however, has not imposed excise duty on jute yarn and it is being exported without any hassles. Following the Indian move, jute traders have said that a huge quantity of jute products have piled up in different domestic jute factories.

Traders have said that Nepal produces 200 tonnes of jute products every day and only 10 per cent is consumed in the domestic market. Domestic traders import almost 70 per cent of raw materials for the jute industry from India itself and exports only finished products.

Golchha said that the Indian government is obliged to remove the tax that has been levied on Nepali jute products. “We have taken up the issue with the Ministry of Commerce (MoC) and Embassy of India in Nepal and we have received positive vibes that the Indian government will allow Nepali jute products to enjoy duty-free access in the Indian market,” he added.

Government officials too expect India to lift the tax levied on Nepali jute products soon.

“We have written a letter to the Indian government urging it to roll back its decision to impose excise duty on jute products as soon as possible,” MoC Joint Secretary Rabi Shankar Sainju said, adding that the Indian government is likely to give duty-free access to Nepali jute products soon.

Meanwhile, Embassy of India in Nepal has said that concerned authorities in India are currently in discussions over the issue of levying excise duty on Nepali jute products.

“Nothing can be said on the issue at present as discussions on the issue are still underway in India,” Ruby Sharma, spokesperson for the Embassy of India in Nepal, said.