Kathmandu, January 4:

India has scrapped import duty on more than 4,800 items from its four least developed countries (LDCs) including Nepal and reduced customs tariff for Pakistan and Sri Lanka as part of efforts to boost trade in South Asia.

“The import duty has been reduced from 16-40 per cent to zero level on items like meat, fish, milk, dairy products, and dry fruits from the LDCs — Bangladesh, Nepal, Bhutan and Maldives,” the Indian Finance Ministry said in a notification on Thursday.

However, the duty rates on these items have been reduced to 12 to 20 per cent on goods imported from Pakistan and Sri Lanka. These new rates have already come into effect from January 1.

All pharmaceutical products and drugs can now be imported at 10 per cent duty from LDCs, as against 12.5 per cent duty earlier. However, tariff on drugs has not been reduced in case of Pakistan and Sri Lanka, the notification added.

Customs duty on fertiliser, lime and cement items has been reduced to 10 per cent in case of LDCs, but it would remain at 12.5 per cent for Pakistan and Sri Lanka. Dairy products, excluding milk powder, and butter oil can also be imported from Bangladesh, Nepal, Bhutan and Maldives at zero duty.

The decision to abolish duty on dairy products from these countries is unlikely to impact the Indian domestic market or benefit these countries, as they are not major players. Pakistan and Sri Lanka, which could export dairy products to India, would have to pay 20 per cent duty on these products.

The LDCs like Nepal is likely to benefit from this tariff liberalisation under SAFTA agreement and is expected to help gap ballooning trade deficit with India, which averages over Rs 75 billion a year.

Although India is Nepal’s largest bilateral trading partner with the bilateral trade volume comprising almost two third of Nepal’s total foreign trade, the trade balance has always remained in favour of India. Even during the first quarter of current fiscal year, the trade deficit has already crossed Rs 20.87 billion with imports standing at Rs 30.97 billion against

the slow exports of Rs 10.10 billion.

Nepal had imported various goods worth Rs 117.74 billion from India during the last fiscal year, while export volume stood at Rs 41.87 billion.