KATHMANDU: After gold, it’s silver that is being smuggled in as there is a vast difference in the customs duty rates of India and Nepal. Gold and silver traders had earlier urged the government to hike the customs duty to control excessive import and prevent smuggling.
Due to excessive gold import, the government moved to avoid dollar deficit and banned the import of gold for more than a month. However, it has failed to control excessive silver import.
The customs duty on silver in India is Rs 1,500 per kg while the same in Nepal is Rs 300 per kg. Per day consumption of silver in the local market is estimated to be 100 kilos. Total silver import since mid-January has been 13,000 kg, according to Nepal Gold and Silver Dealers’ Association (NEGOSIDA) president Tej Ratna Shakya.
“Since per day consumption of silver in the local market is only about 100 kilos, the amount of silver imported since mid-January is more than enough to fulfil our local market for about a month and half,” he added.
As NRB under the check-and-control-mechanism has banned the import of gold, it should follow suit in terms of customs duty on silver to curb its excessive import, he said adding the difference between Nepal’s and India’s customs duty rates is encouraging smuggling.
Citing data on import of silver since mid-January, Shakya said that the supply has far exceeded demand in the local market. He said that against this backdrop, the government should focus on internal demand and put in motion a mechanism to control silver smuggling.
Although NRB resumed the import of gold on April 2, traders here have expressed their dissatisfaction over the NRB decision to put a ceiling on the import of gold up to 10 kg per day based on the recommendation of Nepal Bankers’ Association (NBA).
Meanwhile, NEGOSIDA, in a press statement, urged the government to withdraw the decision, reasoning that the import ceiling will create a shortage of gold, thereby adversely affecting fair trade in the local market. The association has pressed for allowing import of at least 20 to 25 kg of gold per day.
According to Shakya, NEGOSIDA should get permission to authorise private parties to import gold. “The decision of NRB to import gold at the recommendation of bankers’ association is fallacious,” he said, adding that check-and-control is a must to ensure fair trade.
Meanwhile, silver opened at Rs 510 per tola.