India exempts CVD on Nepali jute exports

Kathmandu, April 25

The Indian government has lifted the countervailing duty (CVD) imposed on export of Nepali jute products.

Issuing a press note today, the Embassy of India in Kathmandu, said that the Indian government issued a notification last week exempting levy of additional customs duty on jute products from Nepal. “Henceforth, no CVD shall be imposed on Nepali jute products when imported to India,” the statement of the Indian Embassy reads.

The government of India also believes that abolition of CVD will substantially enhance the export of Nepali jute products to Indian markets, thereby helping the people engaged in jute industry of the country.

The export of jute products from Nepal to India had halted for the last four months after the Indian government imposed excise duty of 12.5 per cent on different Nepali jute products beginning December 15. Such import-restrictive levy was imposed on jute yarn, fabric and jute bags. The imposed CVD on Nepali jute exports ranged from $6.30 to $351.72 per tonne on jute exports to India.

This restriction imposed by the Indian government on Nepali jute products had immediately garnered criticism from Nepali private sector and the government itself citing that the Indian government’s move had violated the Nepal-India Trade Treaty that ensures duty-free access for Nepali jute products in the Indian market. Efforts were then made by the Nepal government and the private sector to encourage the Indian government to roll back the decision to levy CVD on Nepali jute products.

“Domestic jute industries were on the verge of collapse after such imposition by Indian government. However, it is praiseworthy that India has finally exempted the tax levy, paving way for Nepali jute factories to flourish,” said Raj Kumar Golchha, president of Jute Industry Association of Nepal, adding that domestic jute companies have already started full-fledged production following the exemption of CVD by India.

Currently, there are four jute companies operating in Nepal — Arihant, Swastik, Baba and Raghupati.

India is Nepal’s largest importer of jute products. As per traders, Nepal produces almost 200 tonnes of jute products every day and more than 90 per cent of Nepali jute products are exported to the Indian market. Domestic jute factories, however, are reliant on India for supply of more than 70 per cent of raw materials.