The garment industry is likely to benefit with India’s decision to end levying of additional customs duty on 162 Nepali export items, including those belonging to textile and garment industry.
In 2006, India had imposed an additional customs duty of four per cent on 331 Nepali items. Subsequently in 2008, the duty was waived off on 169 items. However, the duty continues to be levied on the remaining 162 items and would be stopped once the waiver is implemented from March 2012.
Briefing about the benefits of the waiver to Nepali textile and garment industry, commerce and supplies secretary Purushottam Ojha said that all textile and garment items are included in the waiver of additional customs duty. "The garment producers have started exporting to the Indian market since the last couple of years," he said, adding that some of them are manufacturing textiles for Indian exporters as well; they manufacture to some extent and rest of the value addition is done in India and then the final products are exported to a third country. "Both the garment sector and contract manufacturers will benefit from the waiver of additional customs duty on the textile products."
In the past, garment industry employed a large number of people. However, due to decline in garment exports, many industries closed down.
"Now, with India waiving off additional customs duty, it will certainly have a positive impact and increase Nepalese exports to India,” Ojha added. “It will, in turn, boost the industry and will consequently have positive impact on employment generation and people can have better incomes."
It will also expected to narrow down the wide trade gap that currently exists between India and Nepal.
Shankar Prasad Pandey, chairperson of Trade Committee, Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said that the imposition of additional customs duty on most of the Nepali products made them uncompetitive with Indian products. "Due to this, Indian imports from Nepal dwindled," he said, "But, with the removal of the additional customs duty, we are now hopeful that all our products will be easily exported to India."
Actually, the entire process will become smoother.
”In the context of garment industry, he opines, “After this waiver, a lot of Indian companies are likely to come here in Nepal and expand their business in the Nepalese garment industry. They would even buy products from here. Thus, it will benefit Nepali as well as Indian traders and entrepreneurs.”