Kathmandu, June 2
Nepal
Textile Industry Association (NTIA) said on Thursday that the budget of the
upcoming Fiscal Year 2022/23 largely failed to address the demands put forth by
the domestic textile manufacturers.
"The
budget of the next year not only failed to address our demands but also
remained silent about the continuation of the incentives we have been
getting," President of NTIA, Shailendra Lal Pradhan said at an interaction
on the issue with the journalists.
Although
we have been continuously advocating for our requirements and policies that the
state should adopt to promote the textile industries, and updated Finance
Minister Janardan Sharma Prabhakar, Industry Minister Dilendra Prasad Badu and
other stakeholders about the status of the business and incentives and other
policies required for its development, government seems indifferent to the
contribution of the textile industries in employment and economy.
NTIA
demanded for 70 per cent return on Value Added Tax or reduce VAT to 5 per cent
as India charges 5 per cent on textile. "Likewise, cotton yarn should be
included on the list of VAT. It will end the malpractices in cloth sales and
increase the revenue for the state," said Pradhan.
According
to him, all industries running with electricity should be registered with the
VAT, this provision will reduce the inequality and create platform for healthy
competition. Likewise, all businesses selling textiles should be registered at
the VAT to check the sales of illegally imported clothes.
He
said that there should be realistic evaluation of customs duty on textile and
related goods imports, as well as provision of floor price and VAT.
Similarly,
while the customs duty on cloth import is 15 per cent, it is being imported at
5-7.5 per cent as per the rules of SAFTA (South Asian Free Trade Area) which
has negatively impacted the domestic industries as they couldn't compete with
cheap imports.
"The
government should continue with the provision of 50 per cent subsidy on
electricity to the industries registered with the VAT. The 5-year ceiling of
new loans with 5 per cent interest should be at least 10 years," said
Pradhan.
It
is worrying that the government only sees the already dead Hetauda Textile
Industry but not the successfully running private sector industries, Vice
President of the NTIA, Jitendra Lohia said.
He
maintained that the ministries also discouraged the entrepreneurs saying that
the Nepali goods can't compete with the cheap foreign goods while banks and
financial institutions are hesitant to mobilise their loans to the sector that
is touted as 'having less potential'.
"There
are chances of making 500 per cent value addition if we import yarn and
manufacture cloth here. There are many industries that are in operation just
because the government incentives help them to remain alive," said Lohia.
Textile
contributes 5 per cent to the GDP of India, 7 per cent of China, and 20 per
cent each of Bangladesh and Vietnam. Attraction to this sector is growing in
Pakistan, Laos, Cambodia and other countries as well.
Currently,
more than 250 textile industries are in operation in Nepal which have employed
about 50,000 individuals directly. About Rs. 22 billion is invested in the
sector. According to NTIA, about 85 per cent of the textile consumed in Nepal
either comes through smuggling or is under-invoiced. Domestic industries
produce textile worth Rs. 15 billion while the size of textile import is Rs. 50
billion.
It
said that the statistics of the Department of Customs showed that textile of
about Rs. 6 billion is used in Nepal in a year but legal imports and local
production make up only Rs. 1 billion.
Most
of the textile industries have died at the Morang-Sunsari Industrial Corridor and
only Pragati Textile is in operation. Likewise, industries in other areas
including the Kathmandu Valley have also been shut in the past years.
Published in The Rising Nepal daily on 3 June 2022.
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