"Though we lack concrete statistics, quick estimates show that the total volume of smuggling has gone up to the equivalent of 60 percent of official trade," said Dev Bhakta Shakya, a high ranking official at the Federation of Nepalese Chambers of Commerce and Industry. [break]
Smuggling equivalent to around 30 percent of formal import has been there for some time, but such illicit trade has increased by two folds in the past six months, he added.
Even officials at Nepal Rastra Bank admit smuggling has increased, referring to pressure they are facing to meet soaring demand for Indian currency (IC) although the bank has already injected Rs 88 billion worth of IC into the economy over the past eight months. The central bank had injected Rs 53 billion during the same period last year.
"The demand for IC is soaring although official import growth from India has shrunk to 1.5 percent," said an NRB official.
Likewise, less-than-target revenue collections by the Department of Customs (DoC) and handsome growth VAT collections (some 20 percent higher than target) by the Inland Revenue Department (IRD) challenge MoF´s claims of taming imports.
"Latest data show consumption stands strong but government figures show domestic productions have grown only nominally. So where is the supply coming from?" questioned the NRB source.
For instance, NRB data show country´s gold import has shrunk dramatically to Rs 2.62 billion from Rs 37.46 billion in eight months this year. But gold dealers openly admit that consumption of gold still remains high and demand is being fulfilled through smuggled supply of some 15 to 20 kgs a day from India.
"Nepal is currently spending as much as Rs 2.10 billion worth of IC to illegally import gold every month," said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers´ Association (Negosida). "Our calculation is that the official figure is short by around Rs 17 billion," he told Republica.
And drop in import of vehicles -- another factor government cites for low import -- too is faulty, said traders, who elaborate that vehicle smuggling too is at its peak now. Even officials at the Department of Revenue Investigation (DRI) admitted the traders´ contention. Members of a high-level panel formed to plug revenue leakage who visited various bordering districts had recently dug out a vehicle smuggling racket.
The panel found that smugglers were bringing both stolen and new vehicles from India. They would take out the engine and other critical parts and hand over the unusable body to the revenue squad through ´informers´. Then the customs would auction the useless bodies as per existing law and the cunning smugglers would buy them at unbelievably low rates, fit back the parts and get them registered in Nepal.
"We believe hundreds of vehicles are entering Nepal in this way. Mainly such trade is thriving under the auspices of sister organizations of political parties in Tarai districts," a source said.
Director General of DRI Shanta Bahadur Shrestha and coordinator of the panel agreed. "We too found prevalence of such practice in bordering towns like Gaur," he told Republica. The panel had found vehicles were being smuggled through Siraha, Saptari and Morang.
Following the revelation, DRI has pushed for amending the law that allows re-registration of auctioned vehicles. DRI has said such bodies should be auctioned as scraps. But, other authorities are strongly opposed to such amendment.
Officials concerned attribute the rising smuggling to political instability and a lack of will on the part of the authorities.
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