RMG sector hails waiver
KATHMANDU: The Indian budget, which came out on Friday, has brought unexpected cheer to Nepal’s declining readymade garment (RMG) sector. The budget has waived the four percent countervailing duty (CVD) levied on Nepali garment exports. “We welcome the Indian budget,” said Prashant Pokhrel, president of Garment Association of Nepal (GAN). The budget has also waived special additional duty on pre-packaged goods imported for retail sale. The budget says, “This would also cover mobile phones, watches and readymade garments even when they are not imported in pre-packaged form.”
Nepali garment entrepreneurs who have been demanding removal of special additional duty expect the waiver to give impetus to their garment export to India. “With the removal of additional duty, our export to India will increase,” said Pokhrel. Due to the four percent CVD, Nepal’s garment export to India declined by a whopping 83.9 percent in the first five months of this fiscal year.
However, the Indian budget’s hike in customs duty on the import of gold will affect Nepal. It has increased the customs duty on gold import from IRs 320 per 10 gram to IRs 480. Earlier, customs duty on gold import in Nepal and India was Rs 130 per 10 gram and IRs 320 per 10 gram, respectively. After the soaring gold import caused a record deficit in Balance of Payment (BoP), Nepal informally stopped gold import. In the first six months of the current fiscal year, the country imported 12.5 tonnes of gold worth Rs 33 billion. Officials blamed the rise in gold import on the difference in duty in Nepal and India.
With the changes in the Indian budget, illegal flow of gold from Nepal to India might accelerate. “Now,
the government must
hike customs duty on gold import,” said Tej Ratna Shakya, chairman of Nepal Gold and Silver Dealers’ Association (Negosida).