Still waiting for relief

Twenty-six sick industries that were expecting relief package from the government, particularly after the Prime Minister instructed Ministry of Industry (MoI) last week to announce the package, are going to be disappointed again.

Instead of coordinating with the concerned ministries that were involved in working out the relief package, the MoI has decided to implement the ´incentives´ only after incorporating a provision of ´sick industry´ in the new Industrial Enterprises Act (IEA) that it is drafting.

MoI officials say the ministry cannot implement the package, which includes slew of incentives like taxi waiver, loans restructuring and other procedural facilities for sick industries on its own.

“We will need to incorporate a provision of sick industries in upcoming act before implementing it,” Umakant Jha, secretary of MoI, said, indicating that the package will not be implemented anytime soon.

Jha said the ministry was preparing to get rid of legal hurdles so as to implement the package as directed by the Prime Minister´s Office.

An eight-member taskforce comprising representatives from different stakeholders, including National Planning Commission (NPC), Ministry of Finance (MoF) and Nepal Rastra Bank - had prepared and submitted a report on sick industries to the Ministry of Industry a couple of months ago.

The report has labeled 26 industries, including Maruti Cement in Dharan, Bhrikuti Pulp and Paper in Nawalparasi, Basulinga Sugar and General Industry in Kailali and Shree Tiger Tops in Chitwan as sick units.

The ministry, which is supposed to be coordinating with all the line agencies to provide relief to the sick industries as envisioned in the report, is preparing to form different committees and technical teams for implementing the report prepared by the team led by Dipendra Bahadur Kshetry, vice-chairperson of the NPC.

"We will first incorporate the provisions for sick industries in the upcoming act," Anil Kumar Thakur, joint-secretary of the ministry and chief of the Industrial Promotion Division at the ministry, said.

“We are also in the process of forming a high-level team of legal experts to eliminate legal hurdles for implementing the report.”

Thakur said the ministry will expedite the process of providing incentives to the industries only after the draft of the act is endorsed. The new act will replace the existing Industrial Enterprises Act 1992.

Nepal seeks clarity on Indian traders' demand for payment in USD

The Ministry of Commerce and Supplies (MoCS) has approached the Indian government to clarify new terms of payment laid down by Indian exporters, under which they are seeking Nepali importers to pay in US dollar if they are to get duty exemption - a move which has brought imports of excisable goods from India to a halt since last six days.

“We have formally approached the Indian counterpart for explanation through diplomatic channel,” said Lal Mani Joshi, secretary of MoCS.

The ministry took such a step after local importers officially lodged a complaint over the confusion they faced after Indian exporters asked them to make payment in US dollars.

The confusion over terms of payment had surfaced particularly after the scrapping of duty-refund procedure (DRP) system on March 1. Under the system, India used to collect duty on excisable items exported to Nepal and the government of Nepal that used to allow entry of those goods without charging excise duty used to get the due excise collection in the form of duty refund.

After the system is scrapped, the normal understanding between the two governments was that India will allow its exporters to supply goods to Nepal at ex-factory price (without excise duty) and the Nepali customs would charge the due excise duty.

However, traders said the Indian exporters are presently demanding Nepali traders to make payment in US dollars.

“They (exporters) say they have been notified by the Indian authority to supply goods at ex-factory price only if the payment is made on US dollars,” said Pashupati Murarka, vice-president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI).

Murarka said Indian exporters are refusing to deal on ex-factory price when approached for payment in Indian currency.

As the DRP has been scrapped, traders won´t get payment of excise made to Indian supplier refunded.

“How can we pay excise in India and again in Nepali customs?” questioned Murarka. “We can´t pay in US dollars also because Nepal Rastra Bank (NRB) has opened US dollar payment facility for about 250 items.”

Interestingly, officials at the Indian Embassy said the term laid by the Indian exporters is not fair.

“Reserve Bank of India´s (RBI´s) guidelines has not been changed for Bhutan and Nepal. This means Indian traders cannot impose payment terms in USD to Nepali traders,” an Indian Embassy official in Kathmandu said, preferring anonymity. “If what the Nepali importers are saying is true, they should cite specific examples.”

Irrespective of what the officials said, Murarka said the stance of Indian exporters has created confusion among Nepali traders. “This has badly affected imports of cement, clinkers, textiles and vehicles, among others,” he stated.

Nepal Falls under Highly corrupted country

Nepal has been ranked as a highly corrupted country among 178 countries that were surveyed by Transparency International (TI). A report published by TI claims that Nepal's half of the total gross domestic product (GDP) is accumulated through corruption.