The government made such a request after some industries exporting their products to India approached the Ministry of Commerce and Supplies (MoCS) to push for the facility of getting payment in US dollar.[break]
"We have already forwarded their request to the Indian government, as opening such an option would help the nation earn foreign currency from exports to India as well," said Purushottam Ojha, secretary at MoCS.
Leading Indian multinational companies like Aarti Strips and Dabur Nepal had recently approached the MoCS, requesting the latter to lobby with India for the facility.
Rosid Umid Khan, CEO of Aarti Strips, told Republica that the company approached the government to request India to pay Nepali exporters in convertible currency - the US dollar - with the objective of increasing its exports to the southern neighbor.
“We pushed for the facility as the government has announced cash incentives for top earners of foreign currency through the budget for the current fiscal year,” Khan said.
Aarti Strips - the sole exporter of corrugated steel sheets -- has been exporting products worth some Rs 5 billion to India every year.
“We will be encouraged to increase our exports to India by 25-30 percent if we are allowed to receive payment in foreign currencies (other than Indian Currency)," said Khan. He said the company is eligible to get 2 percent of the total exports as per the incentive announced by the government.
The government through the budget for fiscal year 2010/11 announced that companies earning foreign currencies would be provided cash incentive of 2 percent of the value of exported goods. If the value addition of exported commodities exceeds 50 percent, such incentive will be three percent and if it is more than 80 percent then the incentives will be 4 percent.
The Biratnagar-based company has been exporting 75 percent of its total production.
Dabur Nepal -- another Indian multinational company -- has also placed similar demands at the ministry.
Trade experts argue that payment in other convertible currency would spark in shortage of IC in domestic market. However, senior economist Dr Bishwambher Pyakuryal said the facility to get payment in convertible currency would boost the morale of exporters in the coming days.
“There won´t be any impact on our economy. Even if there is shortage, we can purchase IC with other convertible currencies,” Pyakuryal added. He also said the government should not have excluded IC from the convertible currencies under the incentives scheme.
The government has set aside Rs 240 million for cash incentives to exporters of goods having high value addition.
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