INDIA BUSINESS WORLD - JUNE 2006
THE MONTH THAT WAS...

INDIA LIFTS 4% DUTY ON FARM GOODS FROM NEPAL

   INDIA has agreed to lift 4% additional duty on primary products, though Nepal is pushing for a blanket waiver on all goods. The issue was taken up during delegation-level talks held after the one-on-one between Prime Minister Manmohan Singh and Nepal premier G P Koirala.

“We want a removal of the 4% additional duty,” - Nepal 's finance minister. Primary products that India has agreed to exempt are basically agriculture goods, including vegetables and items like honey.

India now wants a list of all the products made in Nepal to consider exemptions, sources said. One reason for the list is the porous border with Nepal , which can easily allow goods from a third country to enter Indian markets. India wants a confirmation that products coming from Nepal are made there and not in a third country.

The 4% duty on imported goods was initially brought in on demand of domestic manufacturers during this budget to counter state taxes that are levied on domestic goods. India has earned Rs 100 crore since the 4% duty was imposed from March. But officials say that it is not about the money. India loses much more in terms of duty as the Nepal India Trade Treaty allows duty free and quota free access to Indian market but not vice versa.

“We don't blame anyone but it (exemption of the 4% duty) shouldn't be done on a selective basis just because one or two products are under scrutiny,” Confederation of Nepalese Industries president Binod K Chaudhary, accompanying Mr Koirala, said at a CII function.

Major imports from Nepal include Vanaspati ghee, textiles, polyester yarn, zinc sheets and plastic utensils. “Duty has been causing a big problem for export to India in the last four months and exports have gone down by 28%,” said Chandi Raj Dhakal.