MoCS proposes incentive package to boost exports
The Ministry of Commerce and Supplies (MoCS) has proposed to the government an export incentive package that includes among others the recognition of Indian currency (IC) as a convertible currency for providing cash incentives to Nepali exporters and the provision of highest incentives on exports of goods included in National Trade Integration Strategy (NTIS).
Though the government has announced the cash incentive to exporters earning convertible currencies, earning from in Indian Currency (IC) was not included under the incentive.
Nepal had exported goods worth Rs 39.6 billion to India during the fiscal year 2009/10, 8.4 percent down as compared to the export figures of 2008/09.
As per the existing incentive scheme, exporters of goods up 30-50 percent value addition get 2 percent of the total export value as cash incentive from the government. Similarly, exporters of commodities generating value addition in the range of 50-80 percent will get cash incentive of 3 percent. Those exporting goods generating value addition of more than 80 percent enjoy 4 percent cash incentive.
“Though we announced cash incentives through the budget for the coming fiscal year, this is the first time that we are proposing the inclusion of the provision of highest incentives on exports of goods included in NTIS in the budget,” Chandra Kumar Ghimire, joint-secretary at the MoCS told Republica.
The government has identified 19 products, including seven services, under the NTIS.
“We have proposed cash incentive of 5 percent of the total export volume of products identified by NTIS in the upcoming budget,” said Ghimire.
The government has allocated a total of Rs 240 million to provide cash incentives to exporters of goods having high value addition in the current fiscal year.
“To further boost our exports, we have also proposed to the government to continue exemption of income tax on export earning by 25 percent,” added Ghimire
The MoCS has also suggested that the government establish Trade Trust Fund to channelize foreign assistance aimed at enhancing trade, including the Aid For Trade (AFT — an assistance from developed countries to support enhancing export capacity of least developed countries, to make the assistance more effective. It has also suggested setting up the Export Trading House to support small traders in exporting goods and establish necessary relationship with existing and potential buyers from overseas countries.
Given the low utilization of zero tariff facility provided by China to Least Developed Countries (LDCs), including Nepal, on around 500 goods, the ministry has also incorporated a program to remove obstacles in bilateral trade though talks at local level in a bid to benefit from the facilities provided by the northern neighbor.
The ministry has also proposed to the government to organize a mega trade fair in the country to promote exports by mobilizing diplomatic missions of different countries.
Amid rapid fluctuation of prices of petroleum products in domestic market due to price upheavals in international market, the ministry has proposed that the government set up the Price Stabilization Fund worth Rs 10 billion to maintain stabilize petroleum prices by mobilizing the fund.
It has also proposed that the government set up internationally accredited laboratories in the premises of Nepal Bureau of Standard and Metrology (NBSM) and Department of Food Technology and Quality Control (DFTQC) to certify the quality of Nepali exportable products.
Similarly, the MoCS has proposed that the government raise customs duty on betel nuts to 80 percent from existing 25 percent to discourage illegal entry of betel nuts to India. India has been slapping customs duty of 10 percent to discourage betel nuts exports.