KATHMANDU, Oct 8: The Nepal-India Chamber of Commerce & Industry (NICCI) on Wednesday apprised Finance Minister Rameshwor Khanal of the likely impacts of India’s recent Goods and Services Tax (GST) revision on Nepal’s manufacturing sector, while also raising concerns over the suspension of Initial Public Offerings (IPOs) and long-standing issues related to foreign direct investment (FDI).
During a courtesy call at the Finance Ministry in Singha Durbar, a delegation led by NICCI Officiating President Kunal Kayal expressed worries that the GST revisions approved by India’s 56th GST Council—effective from September 22—could significantly disadvantage Nepali industries. The new rates, which re-base maximum retail prices (MRPs) across several Fast-Moving Consumer Goods (FMCG) categories, are expected to widen price gaps, encourage grey-market inflows, and create turnover and margin pressures for domestic producers.
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According to a letter submitted to the minister, Nepali industries would either be forced to mirror Indian MRPs, putting pressure on margins, or face arbitrage opportunities exploited by wholesalers if they maintain current pricing. The chamber cautioned that lower Indian MRPs, coupled with exporter liquidity, would likely encourage retail-pack leakage into Nepal through the open border, leading to an influx of illicit goods and undermining local products. “Nepali industries are already disadvantaged by customs duties and higher production costs. Grey-channel imports bypass these costs, making local manufacturers extremely uncompetitive,” NICCI stated.
The chamber noted that the most affected categories would likely include soaps, toothpaste, shampoos and food products. While Nepali consumers may enjoy cheaper imports, local manufacturers would not be able to revise prices without equivalent tax relief, leaving them exposed to intense competition. If the government fails to respond, smaller businesses could collapse under adverse economics, leading to job losses and long-term harm to domestic industries.
NICCI also voiced concern over the Securities Board of Nepal (SEBON) halting IPOs without clear justification, saying the move has shaken investor confidence. The delegation further discussed opportunities for Indian companies to support Nepal’s post-protest reconstruction and drew attention to persistent hurdles in FDI inflows.
In response, Finance Minister Khanal said that the current government’s primary mandate is to conduct free and fair elections and focus on reconstruction. He urged companies to contribute to the government’s reconstruction fund while acknowledging that many of the issues raised would require new laws, which the caretaker government is not in a position to introduce. “However, I will try to facilitate the issues,” he assured. On IPOs, Khanal said SEBON would address the matter soon, while also promising to review the GST concerns raised by the chamber.
The delegation included NICCI Treasurer Kiran Malla, Executive Members Navneet Gupta and Uttam Bhlon, Co-Chair of IBF at NICCI Saibal Ghosh, Member Vidushi Rana, Director General Keshab Man Singh, Director Marshal Rathour, Program Consultant Kuber Chalise, Unilever Nepal Legal Head Govinda Shahi, and Chief Finance Officer Ayush Sharma. Representatives from Berger Nepal, Unilever Nepal, National Insurance Company Ltd, Goldstar Shoes, hydropower projects and other companies were also present.
