December 7: The government has decided to lift the ban imposed on the import of four types of luxurious goods. A cabinet meeting held on Tuesday took the decision to this effect.
A source at the Ministry of Industry, Commerce and Supplies said that the cabinet meeting had agreed in principle not to prolong the import ban.
The ban imposed on the import of smartphones priced above USD 300, cars, jeeps, vans, readymade liquor and motorcycles of more than 150 CC capacity by the ministry will remain in force until December 15. The ministry had presented the proposal not to extend the import ban to the Council of Ministers.
Earlier, Nepal Rastra Bank and Ministry of Finance had recommended to the Ministry of Industry, Commerce and Supplies to lift the ban on the import of four kinds of goods. In accordance with the recommendation, the ministry had tabled the proposal in the Council of Ministers to remove the ban.
After the state coffers witnessed depletion of foreign currency reserves, the Ministry of Commerce and Supplies had banned the import of 10 luxurious goods by publishing a notice in Nepal Gazette on April 26, 2022. Back then, the government had banned imports of ten items including large-sized colour television, playing cards, diamond except raw materials, cigarettes, and all kinds of toys, among others.
The primary purpose of the ban was to increase the foreign currency reserves and improve the balance of payments.
With the ballooning trade deficit and rapid fall of foreign currency reserves, the government had started tightening the noose on imports of some goods since mid-December last year. Initially, Nepal Rastra Bank had set the limit on import of silver. After that, NRB set fifty per cent and 100 per cent cash margin provisions while opening letter of credit (LC) to import luxurious goods. Even with these measures in place, the import did not seem to decline. This had made the central bank to verbally direct the CEOs of commercial banks to stop opening LCs to import vehicles for personal use.
As a last measure, the government had decided to ban the import of luxurious goods. Nepali importers, however, claimed that import of goods other than two-wheelers and four-wheelers had not stopped despite the ban due to the open border which Nepal shares with India. They claimed that the banned items were being smuggled into the country unabated. The import ban has failed to meet the government’s revenue collection target as well.