June 9: The government’s decision to impose Value Added Tax (VAT) on essential food items like wheat flour has threatened the existence of the industries producing such product within the country.

The government has imposed VAT on wheat flour from the current fiscal year, according to the flour producers.

Issuing a joint statement, Nepal Flour Mills Association said that altogether 38 industries producing flour within the country are under risk of collapse.

The association said that they can no longer compete with Indian products which make their way to the Nepali market through legal or illegal channels.

According to the producers, the government’s decision to impose VAT threatens the wheat flour industry which has become self-reliant in the country. This will only encourage import of wheat flour from India, the statement said.

The association said that the government’s decision contradicts its claims that the country will become self-reliant on food products. The producers argue that the imposition of VAT has made it challenging for the home-grown products to compete with Indian products.

The statement further warned that the government’s policy will result in the closure of one after another industry in the country within a few years. Flour producers say they have no option left than to close their business.

“It is better to import products and indulge in trade than to invest millions and risk the investment,” the statement added.