KHATMANDU: The private sector has suggested that Prime Minister Sher Bahadur Deuba’s visit to neighbouring India should primarily focus on some crucial issues of bilateral trade, investment and connectivity.
Major umbrella bodies of the private sector namely, Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Confederation of Nepalese Industries (CNI), Nepal Chamber of Commerce (NCC) and Nepal-India Chamber of Commerce and Industry (NICCI) have suggested the prime minister to hold talks on exemption of goods and services tax (GST) on services procured by Nepali traders in India. Since India imposed GST on July 1, services procured by Nepali traders in India have become dearer due to lack of provision to provide GST waiver facility while making payments in Indian currency.
“GST rules consider ‘export of services’ only when the supplier receives payment in convertible foreign currency,” said Hari Bhakta Sharma, president of CNI, adding, “Nepali traders who procure services in India are deprived of GST waiver facility as they make payments in Indian currency.”
Citing that the country sells US dollars worth around $4 billion every year in the Indian money market to purchase Indian currency to facilitate trade, Sharma said that Nepali traders do not have the facility to pay in convertible currency to get GST exemption on services. “This issue has to be settled promptly through the prime minister level talks and Nepali traders making payments for services in Indian currency should be provided GST waiver facility.”
Services being procured by Nepalis like cargo handling, container freight station charges, transportation, insurance, software purchase and other technical services have become dearer as traders have to pay 18 per cent tax under GST, according to Sharma.
Similarly, CNI has also requested the government to talk with India to carry out a study on a railway link from Kathmandu to Delhi and Kathmandu to Kolkata. During his visit to Nepal at the infrastructure summit organised by CNI in February, Railway Minister of India Suresh Prabhu had mentioned that India could assist in Nepal’s aspiration to be connected with the railway network of India. “Railway connectivity with India will bring transformative changes in the Nepali economy if we could tap that opportunity to be connected with India through rail,” said Sharma.
FNCCI and CNI have both also urged for facility to import third-country goods that are available in India. As per the Nepal-India Trade Treaty, third-country goods cannot be traded in each other’s country, however, along with the expansion of global companies in India, it will be cheaper to import third-country goods from India.
“Many global companies have been setting up their showrooms in India to sell their goods,” said Shekhar Golchha, senior vice-president of FNCCI, adding, “It will be cost effective to import third-country goods from India and moreover the goods will also be delivered on time.”
Sharma of CNI echoed Golchha’s views. According to Sharma, low-volume goods like raw materials for the pharmaceutical industry and equipment for hospitals for instance have to be imported from the originating country despite the goods being available in India.
Similarly, FNCCI has also requested the prime minister to raise the issue of bulk cargo movement facility to the nearest rail head of Nepal border Nautanwa (Bhairahawa) and Jogbani (Biratnagar) from Kolkata and Visakhapatnam Port. NCC has stressed on seeking the Indian government’s support to bring in investment and tourists from India. “We sorely lack investment to achieve the desired growth and bringing in investment from India could be a catalyst for investment from across the globe,” said Rajesh Kazi Shrestha, president of NCC. “The prime minister’s visit should be focused on assuring required protection for Indian investment in Nepal.”
Likewise, NICCI has said that the prime minister should also raise the issue of Regulation on Cross-Border Electricity Trade issued by Central Electricity Regulatory Commission of India, which has stringent criteria for foreign investment projects (except from India) to sell electricity in India. “As we are talking on deepening integration, establishing connectivity in BBIN (Bangladesh-Bhutan-India-Nepal) sub-region and BIMSTEC region, there should not be any bar for energy trade as well,” said Saurya SJB Rana, president of NICCI.