Nepal govt to give 2% cash incentive on garment exports (Nepal)

Following Ministry of Commerce and Supplies’ (MoCS) directions to the Ministry of Finance (MoF), Nepal’s garment industry is likely to get a flat two percent cash incentive on exports.

 

Lal Mani Joshi, Secretary at MoCS, said that his Ministry has forwarded a recommendation to MoF with directions to simplify the cash incentive process. The same recommendation also contains a proposal of allowing a flat two percent cash incentive for the garment industry, he added.

 

He said the MoCS has also requested the MoF to extend the cash incentive facility to industrialists exporting garments to India. It is because some exporters avoid using banking channels while exporting garments to India, which results in fraudulent activities.

 

MoCS directed the Finance Ministry to allow either two percent and three percent or two percent and four percent cash incentive to industries other than garment industry, Mr. Joshi said and added that they have requested the MoF to have only two kinds of cash incentives rather than three different kinds of incentives of two percent, three percent and four percent.

 

Following a Cabinet decision on June 9, 2011, the Government evolved a criteria for cash incentive, according to which, exporters exporting a product with 30-50 percent value addition would qualify for a cash incentive of two percent, while a product with 50-80 percent value addition would get a three percent cash incentive, and those with value addition of above 80 percent would receive a cash incentive of four percent. 

 

Ever since the launch of cash incentive facility, there has been disagreement between the Government and the industrialists owing to complex process of ascertaining the proportion of value addition.

 

Referring to several complications and less number of recommendations for the cash incentive facility, the Ministry of Industry urged the MoCS to evolve a new module for the cash incentive process.