The decision to suspend the cash subsidy will have a serious impact on investment, export and employment, and they have requested to resume the system of cash subsidy in exports.
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Federation of Nepal Chamber of Commerce and Industry has requested the government to resume the system of cash subsidy in exports. The federation has asked for the resumption of cash subsidy in exports saying that the decision to suspend cash subsidy will have a serious impact on investment, export and employment.
In the context of Nepal's export position in foreign trade being extremely weak trade deficit is increasing day by day, the government has started a cash subsidy system to encourage the export of domestic value-added goods from the financial year 2068/69.
Industry department issued a notice last Thursday and informed that no application will be taken in the current financial year 2082/83 as an additional obligation will be created. Businessmen are confused. Referring to the instructions of the Ministry of Industry, Commerce and Supply, the department also requested all stakeholders not to register the details of self-declaration for the financial year 2081/82 with the industry department.
Businessmen concerned are of the opinion that the cash subsidy, which was started with the main objective of reducing trade deficit and earning foreign exchange, has helped in the growth of exports by giving some relief to Nepal's export business.
In the financial year 2068/69, the total export was 74 billion rupees, but in the financial year 2081/82, it increased to 2 trillion 77 billion rupees. In the same period, the country's trade deficit is 15 trillion 27 billion annually and the export-import ratio is 1-6.5. In addition, the trade deficit for the first two months of the current financial year has reached 2 trillion 57 billion rupees. According to this figure, Nepal's export situation is not satisfactory and the Federation is of the opinion that stopping the provision of cash subsidies in exports will have more impact.
Various studies have shown that Nepal's transportation costs are 25 to 30 percent more expensive than neighboring countries. In such a situation, there is still a need for cash subsidies to be competitive in the international market," said the statement issued by the federation.
The federation has requested the resumption of cash subsidies for export promotion and import substitution through the Ministry of Industry, Commerce and Supply.
