'Packaging Industries on the Brink of Collapse'

Irrational Government Policy Risks Rs 4 Billion Investment of Packaging Industries

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'Packaging Industries on the Brink of Collapse'

January 10: The future of 15 packaging industries of Nepal looks bleak due to the irrational revenue collection policy adopted by the government. The government’s decision to impose the same customs duty on raw materials as well as readymade products has risked more than Rs 4 billion investment of the industries.

The packaging industries import stationery products like raw papers, ink and gum to make packaging materials including boxes. Such industries have to pay 15 percent customs duty for importing the materials. But the Department of Customs also imposes 15 percent duty for the readymade products, says Managing Director of Shreeram Packaging Pvt Ltd Rabindra Kumar Barnawal.

Barnawal, who is also the treasurer of Birgunj Chamber of Commerce, says that the domestic industries have not been able to compete with foreign companies after the government imposed the same rate of customs duty for raw materials and readymade products.

“The price of imported products is less than the locally produced goods due to the policy adopted by the government,” says Barnawal.

“This has threatened the investment made by the domestic industries,” he added.

Industrialists say that the customs evaluation is not industry-friendly. As per the evaluation of the department, the cost of raw paper has been fixed between Rs 96 to Rs 104 per kg while that of the readymade boxes is Rs 72 per kg. The department charges customs duty accordingly.

“How can the domestic industries sustain if the price of readymade boxes is less by Rs 116 per kg than the home-grown products?” questions Barnawal.

The domestic industries are on the brink of collapse because the government has given priority to import rather than production, says Arbind Amatya, operator of Metrics Printers.

“I personally feel that the government is not clear on whether to save the industries or to increase import,” he says, “If not, the government should immediately discard the policy that encourages import and threatens the domestic industries.”

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