Kathmandu: Nepal Ghee Oil Manufacturer Association has expressed its serious concern that the essential vegetable ghee oil industries are in crisis due to the provision introduced by the government through the new budget.
According to the Economic Bill 2023/24 introduced by the government, 26 ghee and oil industries that are currently in operation will fall into crisis, said the Association by issuing a press statement.
The budget of the fiscal year 2023/24 abolished the existing customs duty of 1 per cent and fixed it at 10 per cent.
Due to this the vegetable oil and ghee producers in Nepal by importing raw materials have been disappointed. They complained that when the industries are facing internal and external shocks, they have been closed due to the increase in customs duty by the government.
As the budget presented by the government for the next fiscal year 2023/24 ‘will have a serious and long-term impact on the industries’, the Association has requested the government to provide relief and protection to the domestic industries.
At present, a total of 26 industries with a total investment of Rs. 100 billion are in operation which have been in operation for more than two and a half decades.
The Association informed that these industries are currently providing employment to a total of 15,000 people directly or indirectly.
According to the data provided by the Association, ghee and oil worth Rs. 27.27 billion have been exported by mid-May of the current fiscal year.
Ghee and oil worth Rs. 93.69 billion were exported in the last fiscal year.
Likewise, vegetable ghee oil industries have contributed 20 to Nepal’s total exports.
These industries have collected foreign currency from a minimum of Rs. 6 billion by exporting goods with value addition in the imported raw materials, said the Association.
According to the Association, the industries affiliated to the Association had contributed Rs. 3 billion in revenue under income tax in the last three years.
During the first 10 months of the current fiscal year, the entire industry has suffered an unexpected loss of more than Rs. 10 billion, so no income tax has been paid.
Demanding to maintain the customs rate at 1 per cent, the businessmen informed that the increase in the customs tax will harm the consumers and the price of oil and ghee will increase by Rs. 15 per litre.
Earlier, the government of India had maintained zero per cent customs duty and 5 per cent GST on edible oil from a year ago to provide relief to the consumers from the pressure of high prices, while in Nepal, raw materials are subject to 10 per cent customs duty and 13 per cent value added tax.
Due to this, the production cost of domestic industries has increased, low quality oil is imported from India illegally and the tariff rate difference of almost 20 per cent between India and Nepal has caused an adverse economic impact on the government’s revenue and domestic industries.
After the Association drew attention to the matter, the government, through the “Relating to the Rate Amendment of the Economic Bill 2079” through the Nepal Gazette dated September 8, 2022, reduced the 10 per cent customs duty to 1 per cent. As a result, consumers were also consuming quality refined oil.
