Our focus should be on increasing the export of goods produced/manufactured from Nepal's raw materials. The possibility of such items is not non-existent in Nepal. Many Nepali products such as cement and clinker, plywood, ginger, tea, cardamom, coffee have shown good export potential.
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The increase of 32 percent in the export of overall goods from Nepal in the first 6 months of the financial year 2081/82 is a remarkable figure. In the background of exports worth 74.96 billion in the first 6 months of the financial year 2080/81, the export of 98.78 billion in the same period of the current financial year shows that we also have the potential and basis to increase exports.
The share of edible oil (soybean, sunflower and palm) in the latest export data is 25.2 billion. Whereas, in the 6 months of the previous financial year, only 3.45 billion worth of oil was exported.
What should be noted is that edible oil, which is the main part of the export data, is not a Nepali product, but raw materials are imported from other countries, processed and exported to other countries. Therefore, the main challenge now is to maintain the growing rate of exports and to increase the share of Nepali production in it. The government and all concerned agencies should do their homework for this both policy and practice.
Even though oilseeds such as soybean, mustard, sunflower, and sunflower are produced in Nepal, they do not meet the demand of Nepal, and there is no possibility to export them. Therefore, crude oil is imported from America, Argentina, Ukraine, Indonesia, Malaysia, Thailand. During the first 6 months of the current financial year, crude oil worth 40.84 billion has been imported.
Nepali demand is met and exported from that. However, imports appear to be more than exports. But when importing and exporting raw materials, there is a cycle of about 100 days and because the industrialists also keep a balance, it is said that the export is less than the import. Although the business/business will have its own methods and strategies, it appears from the data that for the time being, edible oil is an attractive sector for export.
The commercial agreement between Nepal and India and the policy changes made by India a few months ago also played a role in creating attraction in oil exports. According to the treaty, goods produced in Nepal with 30 percent value addition get duty-free entry into the Indian market. In this perspective, India has increased the customs rate of oil imported from other countries last August. That is why the oil industry is giving priority to exports. Which has given a positive rise to the data of exports from Nepal.
Although the cycle of crude oil import, processing and export continues, it has contributed to reduce the trade deficit. As the main market is India, it also benefits the Indian rupee reserves. On the other hand, it has also created jobs. It is said that about 15,000 people are directly/indirectly employed in the oil industry alone. However, at this point in time, however strong the oil export figures may appear, they are not sustainable.
This figure is likely to shrink as India makes policy changes. For example, before the Covid epidemic, India's oil duty rate was 42 percent. At that time it was only 10 percent in Nepal. Exports from Nepal increased as customs duties were expensive in India. As he reduced the customs rate in 2022, exports from Nepal decreased. Again on August 19, India raised the basic customs duty on crude and refined edible oil by 20 percentage points, bringing the import duty on crude oil to 27 and a half percent.
Exports from Nepal increased again. Looking at the data of the last few months only, it is clear that even though the export of edible oil is positive, it is not sustainable. Therefore, looking at the current policy of India and the current export data from Nepal, one should be aware of the possibility of risk arising at any time.
Importing raw materials from other countries and then exporting finished goods to another country is only clever to be able to benefit from the policy changes of a certain country in a limited time. Therefore, our focus should be on increasing the export of goods produced/manufactured from Nepal's raw materials. The possibility of such items is not non-existent in Nepal. Many Nepali products such as cement and clinker, plywood, ginger, tea, cardamom, coffee have shown good export potential.
In order to increase exports, there should be a situation where the growth and quality of the products here should be ensured. For that it is necessary to use new technology. Simultaneously, cost reduction measures should be adopted. Professional environment should be created. Smuggling should be minimized to create a competitive position with imported goods.
The government should do homework for laws and policy changes, subsidy packages to encourage production, or make the existing provisions more effective. At the same time, there should be meaningful dialogue with other countries to facilitate exports. Diplomatic relations should be used. It not only plays a role in balancing the trade deficit by increasing the export of goods produced from Nepali raw materials, it also spreads the cycle of employment and self-employment to the local level.
