By Sudeshna Sarkar, IANS
Kathmandu : Dabur Nepal, one of the top 10 manufacturers of fruit juices in the world and a major exporter to India, is urging neighbour Bangladesh to reduce the duty on exported juice as its bid to enter that market is thwarted by a whopping customs duty.
Dabur Nepal, the wholly owned subsidiary of the Indian FMCG (fast moving consumer goods) giant, is the biggest juice manufacturer in the Himalayan kingdom, holding 58 percent of the local market with its Real brand.
Its annual turnover in juice exports amounts to over Nepali Rs.1.5 billion ($24 million), the consignments going mostly to India.
“Nepal has a juice market of Rs.1 billion ($16 million),” says Udayan Ganguly, chief of Dabur Nepal. “Because of the government’s encouraging policies, it is growing at a rate of 35 percent.”
Dabur Nepal received a boost this year when the government agreed to refund it the duty it had been paying on the packaging material imported from outside Nepal for Real.
Since 1998-99, due to a conflict between two acts, Nepal had stopped refunding manufacturers the customs duty they had to pay on imported packaging material though it was used to export finished goods.
Dabur Nepal’s duty drawback dues grew to Rs.450 million ($7 million).
However, this year, Finance Minister Ram Dharan Mahat pledged in his budget speech to refund the duty and since last month, eligible exporters have begun to get the first instalment of the refund.
But there is little incentive for foreign companies in Bangladesh, where four local manufacturers dominate the juice market.
A whopping 80 percent customs duty on fruit juice imports has blocked the entry of foreign brands, including Dabur Nepal.
The Taka 900 million Bangladesh juice market is currently dominated by Pran, which accounts for 44 percent of the sales. Danish and Starship, two other local manufacturers, hold 22 percent each.
At the fourth place is local Acme, whose control varies from eight to 10 percent of the market.
The local grip has caused the juice market to slow down, growing at a rate of only about five percent.
With the SAARC countries stepping up efforts to boost inter-region trade as well as infrastructure and Nepal and Bangladesh to be connected through rail service, the latter country holds immense potential for Nepal-based entrepreneurs.
At a recent bilateral meeting of commerce officials of Nepal and Bangladesh in Kathmandu, Dabur Nepal urged the visiting Bangladesh delegation to look into the customs duty issue and reduce it.
If Dhaka turns a responsive ear, it would also mean a shot in the arm for the Nepal government, boosting its foreign exchange earnings.