Textile mills warn to padlock industries again

Kathmandu, Dec. 4: The textile entrepreneurs have again warned of shutting down  their industries at any time from now since the government did not fulfill its promise to address the grievance of the industry by finding an alternative to the annulled Value Added Tax (VAT) refund system.

They said that they believed in the words of the Finance Minister who asked them a 10-day period to settle the issues and find a solution to the problem.

“But it has already been 16 days and we have not heard from the government. The government could not meet its own deadline and there has been no communication from the the government side,” said Shailendra Lal Pradhan, President of the Nepal Textile Association (NTA).

According to the businessmen, the government has proposed 3 per cent price adjustment for the textile industry in response to their demand for 13 per cent grant in their cost or price adjustment for raw materials.

They said that the removal of the VAT refund facility had increased the textile production cost by almost 9 per cent and made the domestically produced cloth more expensive which caused the loss of the market.

Demanding a review of the government’s decision to remove the VAT refund system through the budget of this fiscal year, the textile entrepreneurs had decided to shut down the industries for a week, from November 17 – 23, and about 250 textile mills across the country were immediately shut down.

But the NTA withdrew the decision on November 18 and opened the padlocked mills following an assurance from Finance Minister Dr. Yuba Raj Khatiwada to find a pragmatic solution to the problem.

“We had found the Finance Minister very positive to our demands and were hopeful that there would be an inspiring solution. But we have a feeling that the government is not serious to our demands,” said Pradhan.

“If the government comes with the solution of 3 per cent price adjustment, we will shut down the mills again,” he added.

 The textile entrepreneurs said that they would be satisfied with alternatives like border regulation, control of under-invoicing, formulation of anti-dumping law, and subsidies on electricity and import of the chemicals and machines.

A government-formed committee that included private sector representatives as well has suggested subsidy on electricity, including textile in priority sector lending, tax discount on machine, parts and chemical import.

Published in The Rising Nepal daily on 5 December 2018.