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.