It´s strange that ready shoes attract less duty while raw materials used to manufacture footwear attract a significantly higher duty on their import into the country. If the government rationalizes the tax regime, footwear industry, for one, can really make the country proud. [break]
Addressing the closing ceremony, Pradip Jung Pandey, Vice President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said Made-in-Nepal footwear products can replace the imports completely, provided the government promotes locally-produced goods through a rational tax regime.
According to Nepal Leather Goods and Footwear Manufacturers Association (NLGFMA), Nepali footwear industry can flourish if the government relaxes tax rates for the import of raw materials. Currently, manufacturers have to pay 35 percent customs duty while importing raw materials from different countries.
"We import around 33 raw materials including adhesives from other countries and the tax on raw materials is much higher than the tax on ready shoes being imported. This has made the locally-made footwear more expensive than the imported ones," said Hom Nath Upadhyay, president of NLGFMA.
Upadhyay said, "We have requested the government to categorize the materials that are imported to produce leather goods and demanded to reduce the customs duty to 5 to 7 percent. If the government agrees to do so, the industry will flourish," he added.
They were speaking at the concluding ceremony of the Eighth Leather Goods and Footwear Expo in the capital on Monday. Manoj Kumar Shrestha, secretary of NLGFMA, said the association is planning to organize a sale in February and a regional-level expo in shortly.
According to organizers, 110,000 visitors observed the exhibition and the turnover touched Rs 10.2 million. Nepali manufactures are producing around 16 million pairs of footwear per annum while the total domestic demand for footwear is around 32.5 million. Nepal imports 80 percent of the raw materials from China and India, according to the association.
"It is praiseworthy that Nepal Leather Goods and Footwear Manufacturers Association (NLGFMA) has been able to capture 55 percent of the market despite problems such as load-shedding, labor crisis, brain drain, among others," said Pandey.
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