Kathmandu. The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has urged the government to resume the provision of cash subsidy on exports.
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has urged the government to reinstate the provision of cash subsidy on exports, saying the decision to suspend cash subsidy would have a serious impact on investment, exports and employment.
The government had started the provision of cash subsidy from the fiscal year 2068/69 BS to encourage the export of domestic value-added goods in the context of the trade deficit increasing day by day due to the weakening of the export situation in Nepal’s foreign trade.
Issuing a notice on Thursday, the Department of Industry said that it would not accept applications for additional liabilities in the current fiscal year 2082/83.
The Department had also urged all stakeholders not to register the details of self-declaration for the fiscal year 2081/82 at the Department of Industry citing the directive of the Ministry of Industry, Commerce and Supplies.
The cash grant, which was initiated with the main objective of reducing trade deficit and earning foreign currency, has helped increase Nepal’s exports by providing relief to them, according to entrepreneurs.
In the fiscal year 2068/69, the total exports were Rs 74 billion, which increased to Rs 277 billion in the fiscal year 2081/82. In the same fiscal year, the country’s trade deficit stood at Rs 1.527 trillion. The export-import ratio is 1:6.5. Similarly, trade deficit in the first two months of the current fiscal stood at Rs 257 billion and export-import ratio of 1:10.5.
According to the FNCCI, this data shows that the export situation of Nepal is not satisfactory and stopping the provision of cash subsidy on exports will have further impact. Various studies have shown that Nepal’s transportation cost is only 25 to 30 percent more expensive than its neighbors, so there is still a need for cash subsidies to be competitive in the international market.
The Federation has requested the Ministry of Industry, Commerce and Supplies to start cash subsidy for export promotion and import substitution.
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