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Kathmandu Monday October 02, 2000 Aswin 16, 2057.
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SAD out, exporters happy
By Bhaskar Sharma
KATHMANDU, Oct 1 - Indian Finance Ministry
finally issued an official notification scrapping Special Additional Duty (SAD) on
Nepalese exports to India Friday, almost two months after it principally agreed to do so,
ending a six-month long row over the additional duty.
India had agreed to lift SAD during Prime
Minister Girija Prasad Koirala's India visit last August. However, Indian customs
continued to impose SAD citing lack of official directive from Delhi. It even slapped SAD
on vegetable ghee exports to India, which was initially exempted from such duty.
Though the much awaited directive has
finally come, the Indian Embassy is yet to relay the notification to Federation of
Nepalese Chambers of Commerce and Industry (FNCCI) officially. Moreover, it is likely that
the actual invalidation of SAD will take a day or two. Badri Prasad Ojha, General
Secretary of FNCCI, said that the Embassy is yet to officially inform the Federation of
the latest development.
"The notification was issued by the
Indian Finance Ministry on Sept 29 and a copy sent to the Indian Embassy the same day.
However, it does not include the other details and it is possible that the actual
implementation upon the directives would be made as soon as officials at the customs
points are informed through the proper channels," said Dev Mukherjee, Indian
Ambassador to Nepal, talking to The Kathmandu Post.
India had announced to impose SAD on all
its imports, including from Nepal, at its last budget on February 29, contradicting the
Trade Treaty signed between the two countries. Nepal India Trade Treaty signed on December
3, 1996, provides a duty free access to Nepalese goods into Indian market.
Till 1996, Nepalese products with at least
50 percent local value addition were only granted a duty free access to India. The 1996
Treaty, which marks a leap-jump in the annals of Nepal-India trade relations, annuled the
provision of local value addition at one-go. Until 1996, it had exhausted tedious 46 years
of the 1950 Peace and Friendship Treaty to pull down the local value addition
content from 90 per cent to 50 per cent.
Though the Treaty signed in December 1996
had brought a face-lift in Nepal's exports to India as well as Indian joint venture
investment in Nepal, the imposition of SAD posed serious impediments to Nepalese exports.
While exports to India peaked up from around 4 billion rupees in 1996 to over 14 billion
in 1999, SAD was feared to pull down the export substantially.
The additional duty imposed by India had
weakened the competitive edge of Nepalese products thereby resulting in decline in
exports. Businessmen had claimed over 30 per cent decline in exports to India since the
imposition of SAD.
"SAD had caused a nose-dive in exports
to India. Its removal is a welcomed step," said Rabi Bhakta Shrestha, first
vice-president of FNCCI.
The abolition of SAD, however, did not come
for free. India used SAD to ease the entry of Indian automobiles into the Nepalese market.
It pressurized Nepal to accept Indian vehicles upon self-certification by the
manufacturers themselves. This is against Nepal Vehicular Mass Emission Standard-1999,
which clearly states that vehicle imports must be accompanied by certificates of
Conformity of Production (CoP), along with other procedures.
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