Economy and Business

Exporting industries in Nepal face delays in government subsidy payments


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KATHMANDU: Companies who export "Made in Nepal" items worth over Rs. 500 million have asked for government subsidies, but they have been greeted with persistent barriers, leaving exporters discouraged. The government had previously given financial subsidies of up to 8% for a number of businesses, including yarn, cement, steel, and IT, for exports exceeding Rs. 500 million annually.


Although a cash subsidy program was included in the government's budget five years ago, it wasn't operationalized until two years ago after a work method was developed. Large industries have faced several administrative obstacles and have not received any compensation despite adhering to the regulations and filing applications.


The Ministry of Finance (MoF) was recently requested by the Federation of Nepal Exporters Association (FNEA) to hasten the payment of the promised subsidies. FNEA President Pawan Golyan emphasized that even after the program has been in place for two years, exporters continue to face difficulties in obtaining the money.


Even if they pay their taxes on time and face fines for noncompliance, business owners have expressed their dissatisfaction, pointing out that the government has not fulfilled its obligations regarding the subsidies. One merchant asked why the subsidies were advertised if the government had no intention of distributing them.


Initially, the private sector welcomed the government’s announcement of the subsidy for export promotion, but disappointment has grown due to a lack of implementation. In the meantime, the government has accumulated liabilities, including payments to contractors and various forms of insurance.


Exporters estimate that the total subsidy on exports could exceed Rs. 2 billion. Several government agencies, including the Department of Customs, Department of Industry, and the Ministry of Industry, Commerce and Supplies, are responsible for implementing the subsidy program.


According to the subsidy program's work procedure, any received subsidy must correlate with the income reported in the balance sheet for that year and should be allocated toward international market promotion, technology transfer, and e-commerce.


The FNEA has stressed how the subsidies might help businesses embrace cutting-edge technology, market their goods overseas, and enhance the quality of their output.


While acknowledging the worries of exporters and manufacturers, a senior official from the Ministry of Industry, Commerce, and Supplies (MoICS) said the ministry has been having trouble obtaining the money required for distribution.


The MoICS and MoF are closely collaborating to investigate ways to compensate exporters, possibly with the help of additional funding, the official said.


Exporters who depend on these subsidies to increase their competitiveness in global markets are under a lot of strain as a result of the current circumstances.


The viability of businesses exporting "Made in Nepal" goods depends on the timely disbursement of subsidies, which is still a hope despite the ongoing difficulties.