Post-GST Effects On Nepal’s Exports

In accordance to a media report, Nepali exports into India are dreadfully impacted by the GST implementation and are losing their competition in the market mainly due to the high duties levied in the post-GST phase.The Himalayan Times specifying Nepal Rastra Bank’s latest report mentioned that there has been a forceful decline in the major exports items which were earlier benefited with zero duty or minimal tariff.There has a been a fast fall in the export of juice, fruits, vegetables, jute products, processed food items like noodles, biscuits, cardamom and many others.  Duties on the major export items like juice has gone down by 57 percent which was worth 344 million in the first two months of the current fiscal, when compared to the previous fiscal year worth 800 million.The country had witnessed increased exports of juice products from the past few years, as the Indian multinational Dabur Nepal ranked first in the export of juice to India. It is clarified that the significant reason behind the fall in the export of juice to India is due to the hike in the tariff to export into the Indian market.Previously, before the implementation of the GST regime, the exporters had to pay 6.8% tax, but currently it is doubled up to 12% (IGST) to make juice exports into India. This means, after the Goods and Services Tax regime the Indian market has emerged to be 5.82 percent costlier for the juice exporters.Furthermore in the same manner, the export of large cardamom has declined by 45.3%, vegetables (39 per cent), jute goods (2.3 per cent), noodles (34 per cent) and fruits (85.9 per cent) in the first two months of the fiscal when compared to the previous fiscal. The tariffs have high differences when compared to the pre and post-GST periods specially on processed food, vegetables and other agricultural items.  According to the study done by an independent think-tank South Asia Watch on Trade, Economics and Environment (SAWTEE) on 30 considerable exports into India, there has been an incline of tariff of 5% on big cardamom, 18% on vegetables, 12% on processed food items and other 28 top items.Nepal’s exports to India is likely to fall, as it has been hit hard after the implementation of GST on the top export items.Senior Vice President of Federation of Nepalese Chambers of Commerce and Industry,Shekhar Golchha, said- “Nepali goods have become less competitive in Indian market as they have to pay high duty in post-GST period”."Nepali exporters should diversify their market in short-term and be competitive in longer-term to tap the huge market opportunity in India," he said.  
Kranthi Tilak Reddy
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Post-GST Effects On Nepal’s Exports

Kranthi Tilak Reddy
News Article
07th Nov, 2017
Post-GST Effects On Nepal’s Exports

In accordance to a media report, Nepali exports into India are dreadfully impacted by the GST implementation and are losing their competition in the market mainly due to the high duties levied in the post-GST phase.

The Himalayan Times specifying Nepal Rastra Bank’s latest report mentioned that there has been a forceful decline in the major exports items which were earlier benefited with zero duty or minimal tariff.

There has a been a fast fall in the export of juice, fruits, vegetables, jute products, processed food items like noodles, biscuits, cardamom and many others.  

Duties on the major export items like juice has gone down by 57 percent which was worth 344 million in the first two months of the current fiscal, when compared to the previous fiscal year worth 800 million.

The country had witnessed increased exports of juice products from the past few years, as the Indian multinational Dabur Nepal ranked first in the export of juice to India.

It is clarified that the significant reason behind the fall in the export of juice to India is due to the hike in the tariff to export into the Indian market.

Previously, before the implementation of the GST regime, the exporters had to pay 6.8% tax, but currently it is doubled up to 12% (IGST) to make juice exports into India. This means, after the Goods and Services Tax regime the Indian market has emerged to be 5.82 percent costlier for the juice exporters.

Furthermore in the same manner, the export of large cardamom has declined by 45.3%, vegetables (39 per cent), jute goods (2.3 per cent), noodles (34 per cent) and fruits (85.9 per cent) in the first two months of the fiscal when compared to the previous fiscal.

The tariffs have high differences when compared to the pre and post-GST periods specially on processed food, vegetables and other agricultural items.  According to the study done by an independent think-tank South Asia Watch on Trade, Economics and Environment (SAWTEE) on 30 considerable exports into India, there has been an incline of tariff of 5% on big cardamom, 18% on vegetables, 12% on processed food items and other 28 top items.

Nepal’s exports to India is likely to fall, as it has been hit hard after the implementation of GST on the top export items.

Senior Vice President of Federation of Nepalese Chambers of Commerce and Industry,Shekhar Golchha, said- “Nepali goods have become less competitive in Indian market as they have to pay high duty in post-GST period”.

"Nepali exporters should diversify their market in short-term and be competitive in longer-term to tap the huge market opportunity in India," he said.  

Kranthi
Blog Author

Kranthi Tilak Reddy is one of the co founders and COO of White Matter Advisory services P Ltd. He is an Engineering graduate from SRM University and has done his Masters in finance.Being a true go-getter and an optimist to the core he has grown up the ranks in banking industry at an astonishing rate, his last stint being Associate Director, Business Clients -South with Standard Chartered Bank. With over 10 years of association with SME businesses and clients he certainly brings rich vein of expertise to the WMA table but more importantly his alluring passion towards great and customer service” the foundation on which he asserts WMA has been built.

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