The cabinet had approved the guidelines for cash incentive distribution in the first week of July. But the process has not begun due to the delay of the Department of Industry in forwarding the standard for incentive distribution to the Ministry of Industry (MoI).[break]
The MoCS had asked the DoI to formulate the standard for fixing incentive amount with necessary technical analysis on value addition about a couple of months ago.
“No exporter has received cash incentives so far. We have recently forwarded proposed standard for incentive distribution to the MoI. The process of distributing cash incentive will begin once the MoI approves the standard,” said Dhruba Joshi, spokesperson of DoI.
The red tape delay in incentive distribution has left exporters disappointed. “The government is deliberately delaying incentive distribution as pledged in the budget for two consecutive fiscal years. It has left us disappointed,” said Uday Raj Pandey, president of Garment Association Nepal (GAN).
He also said the government officials were not heeding to their demand of simplifying incentive distribution. “We have told them time and again that we are ready to accept even 2 percent incentive on exports if the distribution process is simple. But it seems that our demands have fallen on deaf ear,” Pandey added.
The government has made it clear that the budget set aside for incentive distribution cannot be frozen even if it is not spent during the fiscal year.
Though the government has increased budget for export incentives by Rs 60 million in this fiscal year, it failed to elate exporters earning in Indian Currency (IC).
“Only the exporters earning in convertible currencies are eligible for the scheme. Exporters earning in IC are not eligible for the scheme this year as well,” said Chandra Kumar Ghimire, joint secretary at the Ministry of Commerce and Supplies.
The government had introduced the scheme from the last fiscal year to boost export of goods having higher value addition. Under the scheme, the government has promised 2 percent incentives on exports of goods having 30-50 percent value addition, 3 percent on goods generating 50-80 percent value addition and 4 percent on goods having more than 80 percent value addition.
Though the MoCS had also proposed that the exporters earning in IC should also be made eligible for the scheme, the Ministry of Finance overlooked it. The MoCS had also proposed additional one percent incentive on exports of products included in Nepal Trade Integration Strategy (NTIS).
The government has identified 19 products, including seven services, under the NTIS.
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