The Ministry of Commerce and Supplies (MoCS) has nearly finalized guidelines on distribution of cash incentives to exporters, as envisaged by the current fiscals year budget.[break]
“We are making arrangements to distribute cash incentives to the exporters through commercial banks and the level of value addition of Nepali exportable goods will be determined by a technical team at DoI,” Toya Narayan Gyawali, joint secretary at MoCS, told Republica on Wednesday.
As per an earlier provision, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and a technical team at DoI were jointly designated for the evaluation of value addition in Nepali exportable goods.
Exporters have been demanding that the government simplify the process of distributing cash incentives and distribute it through commercial banks.
In the current budget the government has allocated Rs 240 million as cash incentives to exporters of goods having high value addition. The Ministry of Finance transfers the amount to Nepal Rastra Bank (NRB), which will make arrangements to distribute it as incentives.
In an effort to boost exports for convertible currency, the government had announced cash incentives of 2 to 4 percent of the value of the exported goods, depending on the degree of value addition. Exporters of goods with up to 50 percent value addition are already enjoying 2 percent cash incentive from the government.
As per the new export subsidy scheme, exporters of commodities generating value addition above 80 percent will enjoy 4 percent cash incentive on their total export income. Likewise, those making value addition in a range of 50 to 80 percent will be entitled to 3 percent cash incentive.
However, the government has already clarified that those earning Indian currency from their exports would not be entitled to export subsidy. Of the total of Rs 61.11 billion in exports during fiscal year 2009/10, Rs 40.11 billions and Rs 21.01 billions worth of Nepali goods were exported to India and other countries respectively.
Officials said Nepali Readymade Garments (RMGs) are among the lowest value-added exportable goods whereas handicrafts, carpets, tea, coffee and some agriculture produce are among the high value-added goods.
According to NRB, Rs 3.88 billion and Rs 333.9 million worth of RMGs were exported to overseas countries and India respectively during the year 2009/10.
Similarly, Rs 1.04 billion worth of handicrafts, Rs 126 million in silver jewelry, tea worth Rs 91.2 million and Rs 4.06 billion worth of carpets were exported overseas.
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