Bridging Borders: Nepal’s Proposal for Customs Collaboration with India


Nepal has proposed a customs mutual assistance arrangement with India, the largest trading partner, to simplify trade-related activities between the two countries.

The agreements will allow for the exchange of information, intelligence, and documents, ultimately assisting the countries in the prevention and investigation of customs offences.

“We have proposed the arrangement. Once the agreement is signed between the countries, it will significantly reduce leakages,” said Ram Prasad Ghimire, revenue secretary of the Ministry of Finance.

He was addressing a panel discussion entitled ‘Voice of Birgunj’, organised by the Kantipur Media Group on Saturday, in Birgunj.

According to him, a separate integrated revenue policy will be prepared for the upcoming fiscal year. “There might be some weakness in revenue policy which we believe has caused an economic slowdown. If there is something like that, it can be reviewed.”

Traders in Birgunj said that revenue leakage has thrived due to growing malpractices.

Anil Agrawal, president of the Birgunj Chamber of Commerce and Industry, said Nepal’s customs imposes a 50 percent penalty if the invoice bill does not match the customs evaluation book.

“To dodge the 50 percent penalty, entrepreneurs and traders are submitting wrong invoices,” said Agrawal, speaking at the third session of the discussion entitled ‘Stable Policy to Uplift the Economy.’

“Despite submitting real invoices issued by India, the customs does not approve it. It evaluates under the book valuation of its own,” Agrawal said. “The customs rules change frequently, on a monthly basis. Corruption has also increased,” he said.

Nepal has banned the import of dried peas. “As India imports dried peas on zero duty, it is then reexported to Nepal,” Agrawal said.

“Why would the government impose a ban on edible goods,” he asked. The government needs to bring a policy that encourages trade through legal channels.”

Responding to Agrawal, Ghimire said that the government has been coordinating with its different bodies and the private sector to ease customs-related difficulties.

Kul Man Ghising, managing director of Nepal Electricity Authority, speaking in the first session titled ‘Industry and Trade, Where is the Infrastructure’, said that the authority has prepared a master plan for the industrial corridor in nearly a dozen cities on electricity demand projections.

“Birgunj and Hetauda are among the clusters with a demand for more than 3,000 MW electricity by 2050. We have started building 400 kV and 200 kV power transmission infrastructure that will have higher capacities to ensure reliabille power supply in the future,” Ghising said.

“The construction work has started. A sub-station is under construction in Parsauni for the same purpose,” Ghising said. “To meet the electricity demand in Birgunj, we have invested Rs20 billion in infrastructure that includes transmission lines, substation and distribution networks,” he said. It would take around 3–4 years to complete the projects.

Agrawal said there is a need to boost the confidence of entrepreneurs and industrialists to do business and trade. Currently, the private sector has lost confidence and factories are shutting down one after another.

“The industries that are operating are also running below 20-25 percent capacity. There is a massive lay-off. Some factories have completely shut down and thrown many people out of jobs,” Agrawal said.

Lawmaker Anil Rungta, who is also an industrialist, speaking at the first session of the event, said, “Until there is a stable government and policy, it is useless to expect the industry sector to improve.”

“The policy changes with the change in government. The industrial and economic policies need to be stable for at least 5 to 10 years.”

Rungta said that the industries in Birgunj are operating at 20 percent capacity due to the lack of electricity. “Due to an unscientific tax system in food industries, they are unable to operate in a full-fledged manner.”

Maha Prasad Adhikari, the governor of Nepal Rastra Bank, speaking in the third session, said that in the past few years, the demand has declined overall, resulting in a decline in credit demand as well.

Source: Kathmandu Post