Nepal: Countervailing duties hits readymade garments

13/01/2012 12:00 - 417 Views

KATHMANDU: Countervailing Duty (CVD) of four per cent is still hurting the garment industry though the Indian government has already removed additional customs duty.

“Though India has waived additional customs duty, we are paying four per cent CVD on our exportable products which has hit our aim to make India our top textile market,” said president of Garment Association – Nepal, Uday Raj Pandey.

The duty, which was removed some two years ago, was reintroduced on February 28, 2011 through the Indian budget.

Before removal of additional customs duty on 162 export items, Nepali exporters were paying total customs of about 10.5 per cent but now with the removal of additional customs duty the charge has reduced to four per cent. “The four per cent countervailing duty is also hurting the exports,” the Pandey said, adding that a number of complaints have been registered in our association regarding it. “We are in an urgent need to take serious action and study the reason for imposing countervailing duty on garment.”

Encouraged with the demand of Nepali garments in the Indian market, exporters have believed it can become another top garment market in the coming years.

According to garment exporters, removal of additional customs duty has reduced some percentage on total charges but it’s not enoughto make Nepali readymade garment more competitive in the international market.

However they stated that the additional duty reduction will hopefully increase some 20 per cent exports to India. India had waived additional customs duty on Nepali export items including products of textile and garment industry in November 2011.

Despite focusing on a single market, the garment industry is now developing plans to expand its market to Europe, India and Australia.

Due to single market concentration earlier, the industry has still been struggling for its existence. Nepal has exported garments worth up to Rs 15 billion when Nepali readymade garments was in demand abroad.

During the fiscal year 2010-11, Nepali readymade garments worth Rs 4 billion was exported. Out of the total, garment worth around Rs 500 million was exported to India only.

Garment worth Rs 1.50 billion — an increment of 5.7 per cent compared to same period last fiscal year — was exported during the first three months the current fiscal year.

By Eliza Manandhar

Source: thehimalayantimes.com