Responding to the request of Garment Association of Nepal (GAN), the Ministry of Commerce and Supplies (MoCS) requested India to remove CVD through Ministry of Foreign Affairs. [break]
India has been imposing 12 percent CVD on Nepali RMGs. This is making Nepali apparels dearer in India, hurting country´s export severely.
“We sent a formal request letter to India through the foreign affairs ministry couple of days ago,” an official at MoCS told Republica.
RMG entrepreneurs say the imposition of CVD is making Nepali apparels dearer by around 20 percent in India compared to products from other competitor countries, mainly Bangladesh.
Data compiled by Nepal Rastra Bank (NRB) shows Nepal´s apparel exports dropped by 64 percent during the first nine months of the current fiscal year compared to figures of the same period last year. During the review period, Nepal exported RMGs worth Rs 133.9 million to India.
Bangladesh, the second largest garment exporter in the world after China, has been giving different incentives to exporters. These incentives help make Bangladeshi products more competitive in international markets. India also sources huge quantity of Bangladeshi garments.
As per the existing bilateral trade treaty, India must provide Nepali products duty-free access to its market.
“Garments are in no way the products subject to the CVD. India has to remove such taxes to ensure that Nepali products get duty free entry in Indian markets,” Uday Raj Pandey, president of GAN, said. According to Pandey, India cannot levy CVD on branded items, which are exempted from excise duty, in line with the treaty.
India had stopped levying CVD on Nepali garments after the issue was raised by then Prime Minister Madhav Kumar Nepal during his India visit in 2010.
Statistics of Trade and Export Promotion Center (TEPC) shows that overall exports of Nepali apparels tumbled by 18 percent to Rs 2.73 billion during the first nine months of 2012/13. Nepal´s apparel export has been declining heavily since 2005 when US ended duty-free access to Nepali RMG. Persisting financial crisis in European countries has also affected RMG exports from Nepal.
During the review period, Nepal´s RMG export to overseas markets plunged by 30.6 percent to Rs 2.25 billion.
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