By Bernama,
Kathmandu : In a major policy reverse, India has rolled back its decision to impose customs duty on maximum retail prices (MRP) of Nepali garments exported to India and will now levy tax on the price indicated on the customs invoice.
Quoting Saturday’s The Kathmandu Post, the Press Trust of India (PTI) reported that this means Nepali exporters will be paying between half to two thirds less duty to India.
According to Nepali Garment Exporters’ Association, the amount of duty paid will come down to around 4 million Nepali rupees (some US$52,631) from 12 million rupees (some US$157,894) going by estimated annual apparel export of 100 million rupees (some US$1.3 million) and on the basis of 4 percent customs duty.
“The central government of India has issued a notification in this connection, rolling back the unfair decision,” said Uday Raj Pandey, Vice President of Garment Association of Nepal.
The decision has come as a great relief to Nepali exporters, said garment entrepreneurs, who added that the sudden decision by Indian customs in the last week of August this year to charge customs duty on MRP instead of the invoice rate had created unnecessary hassles.
“With the fresh decision of the southern neighbor, the duty volume on Nepali apparel will decrease two to threefold, and that means our competitiveness will strengthen in the coming days,” Pandey told the daily.
MRP is always higher than the invoice rate — the price at which producers deliver products.
India’s abruptly imposed customs policy in August had left some 40 million rupees (US$526,315) worth of consignments stuck at Panitanki — the eastern customs point in India, impacting orders already in the pipeline.
Nepal exports more than 100 million rupees worth of readymade garment to India, which has emerged as a major importer in the last couple of years.
India has been imposing 4 percent customs duty on Nepali cotton garments and 8 percent duty on polyester garments.
It has also been levying an additional 4 percent countervailing duty on these exports.
Apart from the base price, experts said Indian customs had also announced they would only accept laboratory test results by New Delhi-based quality certifiers.
The bilateral trade regime governing Nepal-India trade allows duty-free market access to Nepali exports, except for three items in the negative list and five items on which there are quantitative restrictions.
Officials said readymade garments fall neither in the negative, nor quantitatively restricted list.
Rising demand in India — the vast South Asian economy — has brought resilience to the Nepali garment industry, which was on the verge of collapse due to falling markets in western countries.