Unlike in the past, when the duty was imposed at the bilateral level, India this time has imposed it on all countries trading garment with India. [break]
“The duty has been reintroduced through the Indian budget unveiled on Feb 28. This will weaken our competitive edge in the southern neighbor,” said Uday Raj Pandey, president of Garment Association of Nepal (GAN).
Talking to Republica, Pandey termed the reintroduction of duty as a major setback to Nepali RMG industry, which has been enjoying sound expansion in the Indian market only recently.
Nepal had exported RMG worth around Rs 1 billion to India in the last fiscal year. The Indian market has been serving as a new lifeline to the Nepali RMG exporters, particularly after sharp displacement from the US market.
Pandey said exporters were preparing to devise a strategy to bring down the cost of RMG to face adverse situation and retain position in the Indian market.
Nepal mostly exports shirts, T-shirts, suits and trousers to India.
Some Nepali exporters have been supplying RMG to Indian retail chains like Big Bazaar and Liverpool.
“We are discussing on the ways to tackle the newly surfaced challenges to retain our position in the Indian market," said Pandey.
Indian had removed CVD imposed on Nepali RMG a year ago. India was levying 4 percent on maximum retail price (MRP).
Purushottam Ojha, secretary at the Ministry of Commerce and Supplies, said the imposition of CVD would weaken the competitive power of Nepali RMG producers in the Indian market. "We haven´t received any information about the re-imposition of CVD though,” Ojha added. He, however, said CVD imposed on invoice value would make lesser impact than compared to the CVD on MRP.
Nepali RMG exporters have been facing tough time following the phase out of duty-free quota system in US market - Nepal´s largest RMG market then -- since Dec 2004. Owing to favorable market, Nepal had exported RMG worth Rs 12 billion to US in 2001/02.
Nepal had exported RMG worth Rs 3 billion to different European countries and Rs 1 billion in US in fiscal year 2009/10.
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