Together these duties have long hurt the competitiveness of the Nepali readymade garment in the Indian market, and hence, have brought exports of popular brands like John Players, Peter England and D J & G to a grinding halt from the last two months.
"To end this deadlock, we have requested the Indian government to revoke SAD on our garment exports," said Commerce Minister Rajendra Mahato. The request was made on the very first day of the enforcement of the new bilateral treaty.
Given the provision of new treaty, in which India has committed to eliminate SAD and other extra-customs duties for Nepal on request from the government here, Mahato expressed hope that India will withdraw SAD soon. "The visiting Indian Commerce Minister too responded positively to this request when I talked with him about SAD," said Mahato.
However, as India showed no flexibility in removing CVD, a duty which it said is imposed for balancing domestic excise duty levied on textile producers, Nepal has requested it to lower the base on which the tax is being imposed.
Presently, India is levying 4 percent CVD on garment export, considering 60 percent of the tagged maximum retail price (MRP) as the real value of export. Even though exporters said disregarding the invoice value and imposing duty on MRP was a foul play by India. Nepali government has requested India to lower the base of CVD, bringing it down to 40 percent of the MRP.
"As India is imposing CVD to balance excise duty it imposes on domestic producers, we cannot complain about it. But as a good friend, we have requested it to extend its good gesture in the sector by slashing the base on which it imposes the duty," said Mahato.
However, exporters do not agree with the Mahato´s argument. They say the government should have asked India to impose duty on invoice value, something that is practiced world over, instead of imposing duty on MRP.
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