The Industrial Promotion Board - the policy making body led by the Minister for Industry - is currently discussing on the issue. The government has proposed to the board to open the door for cooperatives run by the farmers to open sugar, coffee, tea and dairy factories. However, private sector representatives opposed the move in the board meeting of Industrial Promotion Board held last week.[break]
Dhurba Lal Rajbanshi, director general of Department of Industry (DoI), told Republica that the government had proposed to allow only the selected and concerned groups, like sugarcane and coffee farmers, to open factories. “The logic behind the proposal is strong. We are for supporting the farmers who want to open factories that consume their agro-produces,” Rajbanshi, who is also the member of the board, said.
However, Suraj Vaidya, president of Federation of Nepalese Chambers of Commerce and Industry (FNCC) and Narendra Basnyat, president of Confederation of Nepalese Industries (CNI), rejected the proposal outright.
“It is against the spirit of competition. Unlike the private sector, cooperatives get different facilities from the government,” Vaidya said.
Compared to the private sector, cooperatives get different facilities on income tax, profit sharing and acquiring bank loans, among others.
Currently, the DoI allows registered companies to open industries in partnership or single ownership with the capital of more than Rs 30 million.
The department, however, has proposed to fix capital for industries, promoted by cooperatives, as per the cooperative laws. It has also proposed that cooperatives can open industries focused on only the sector that they specialize on.
Following objection of the private sector, the board has decided to seek opinion from Ministry of Law and Justice, Ministry of Finance and Nepal Rastra Bank before moving ahead on the issue.
“We will again discuss the issue in our next meeting after we get suggestions from the aforesaid bodies,” Rajbanshi said. “We are ready to discuss on the issues raised by the private sector. But we won´t withdraw our plan of allowing cooperatives to open industries.”
Officials say the private sector fears the government would allow cooperatives to open cigarette or wine industry. “Cooperatives have their own principles and they are opened for social good. We won´t permit them to open such factories,” added Rajbanshi.
Sugarcane, tea and coffee farmers repeatedly complain of being exploited by factories that consume their products.
The Department of Cottage and Small Industries issue licenses to small-scale industries that have capital below Rs 30 million.
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