March 3: There has been a shortage of imported goods in the market after Nepal Rastra Bank (NRB) adopted the policy to tighten imports in an attempt to reduce trade deficit.

The market has been reeling under shortage of goods since the last three months after the central bank made it mandatory for importers to have a hundred percent margin while opening LC for importing 46 types of goods that fall under the harmonization code. Concerned authorities say that due to the provision of a hundred percent margin, there has been a shortage of imported goods such as footwear, clothes, fancy dresses, cosmetics for daily use, soap, detergent, powder, shampoo, lip guard, body lotion, soup items, pasta, etc.

Mukunda Poudel, the general secretary of Nepal-China Trade Association, argues that  the merchants could order goods directly from foreign companies under TT (telegraphic transfer) system and receive such goods by paying a certain amount in advance through the banking system.

There was a practice of paying the remaining amount upon the delivery of goods.

But now, the traders have to pay the entire sum to the bank while opening the LC itself and this has caused problems in importing goods.

 “Traders and businessmen are facing monetary crisis as an importer importing goods worth Rs 10 million has to deposit an additional Rs 10 million to the bank. Shortage of products has now started to occur since the majority of importers are not able to import goods due to the lack of money,” Poudel told New Business Age.

Due to the provision requiring hundred percent margin for opening LC, Nepal has been facing problems in importing certain products which it has to depend on other countries.

Due to this reason, consumers are facing difficulty in finding the products of their choice in the market.

According to Durga Raj Shrestha, the chairman of Nepal Distributors Association, the cycle of market has been broken due to the provision of keeping a hundred cash percent margin for imports. He added that traders who could import goods worth Rs 20 million can now import goods worth just Rs 2.5 million.

“First of all, it has made a direct impact on the import of goods. After the import has been affected, there is a shortage of goods in the market and consumers do not get the goods they are looking for and there is no trade in the market,” said Shrestha adding, “When there is no trade, the shopkeepers have no money and face difficulty in sending payment to suppliers and importers. In this way, the market cycle has reached a state of disorder.”