After incorporating the inputs from the Nepal Rastra Bank (NRB) -- the central bank -- the Ministry of Finance (MoF) and the Ministry of Commerce and Supplies (MoCS) gave the final touch on Friday to the draft of the guidelines proposed by MoCS a couple of weeks back.[break]
“We finalized the guidelines at a joint meeting held at MoF on Friday. We will forward the guidelines for cabinet endorsement once we get them back in the final shape from the MoF,” said a source at the MoCS.
The source said the guidelines have given charge to determine the scale of value-addition to a technical team at DoI.
As per the earlier provision, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and technical team of DoI were jointly designated for the evaluation of degree of value addition for the Nepali exportable goods.
Exporters had demanded that the government simplify the process of distributing cash incentives and distribute it through commercial banks. In the current budget, the government has allocated Rs 240 million as cash incentives to exporters of goods having high value addition. The MoF would transfer the amount to Nepal Rastra Bank, which will make arrangement to distribute the incentives.
Exporters can get cash incentives from the government right at the bank from where letter of credit is issued for export. The MoF has already clarified that exporters get incentives on the exports at the convertible foreign currency except for Indian currency.
In an effort to boost exports in convertible currency, the government had announced cash incentives of 2 to 4 percent of the total worth of the goods exported depending on the degree of value addition. Exporters of goods up to 50 percent value addition have already been enjoying 2 percent cash incentives. As per the new export subsidy scheme, exporters of commodities generating value addition up to 80 percent will get cash incentive of 3 percent and those exporting goods after value addition of above 80 percent will enjoy 4 percent cash incentive on their total export income.
Of the total Rs 61.11 billions of exports in the fiscal year 2009/10, Rs 40.11 billion and Rs 21.01 billion worth of Nepali goods were exported to India and other countries respectively. Officials said Nepali Ready-made Garments (RMGs) are among the lowest value added exportable goods where as handicrafts, carpet, tea, coffee and some agriculture produces are among the high value added goods.
According to the NRB, total Rs 3.88 billion and Rs 333.9 million worth of RMGs were exported to overseas countries and India respectively during the year 2009/10. Similarly, total Rs 1.04 billion worth of handicrafts, Rs 126 million worth of silver jewelry, Rs 91.2 million of tea and Rs 4.06 billion worth of carpet were exported to overseas countries.
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