May 30: The government has increased cash subsidies for exports in the budget of the upcoming fiscal year with the aim of giving priority to import substitution by increasing domestic production and exports. The government increased the subsidy limit to encourage the export of goods with high export potential from Nepal after the import-oriented economy put high pressure on the foreign currency reserves.
Presenting the budget for the upcoming fiscal year on Sunday, Finance Minister Janardan Sharma announced that arrangements have been made to provide cash subsidy of up to 8 percent on exports. Earlier, the cash subsidy was just up to 5 percent. He announced that exports will be promoted by identifying products with high export potential such as cement, steel, footwear, purified water and services based on information technology and business outsourcing.
Manufacturers of cement, steel and footwear, had been reducing their production capacity due to lack of market, but are likely to increase production and export after the announcement. The government had included cement in the list of exportable commodities in the policies and programmes of the fiscal year 2076/77. However, cement is yet to be exported. At present, Nepal is self-sufficient in cement and steel while 65 percent demand for footwear is produced within the country.
According to the industrialists of these sectors, they are still unable to operate at full capacity. On the contrary, there is a possibility of increasing production capacity along with increasing cash subsidy on exports. Similarly, the government has revised the minimum limit for foreign investment to 20 million. The government also reduced the previous threshold of Rs 50 million through the budget. It is mentioned in the budget statement that the approval of foreign investment up to Rs 100 million will be done through automated system to attract foreign investment.
The government has launched a Special Campaign Decade starting from 2079 BS with the objective of increasing production for the development and prosperity of the country.
The government has allocated Rs 3.45 billion to start the Prime Minister's Nepali Production and Consumption Growth Program for the growth of Nepali products, job creation and export-oriented trade.
In order to increase the production and use of domestic goods, 'our production, our consumption campaign' will be launched in the new fiscal year. Similarly, Minister Sharma also announced that the Government of Nepal will provide necessary support for campaigns such as Make in Nepal and Made in Nepal implemented by the private sector. The government has allocated Rs 260 million to operate business incubation center in Hetauda Industrial Area to expand knowledge based business in partnership with the private sector.
The budget also has provision to support startups. Sharma said that he would cooperate with the state government for market promotion of the products of Karnali Province.
The government announced that the construction of infrastructure of 105 industrial villages will be completed in the next fiscal year. Altogether Rs 3.79 billion has been allocated for industrial infrastructure.
In its attempt to create conducive environment for the establishment of industries in the country, the government has made provisions to lease state-owned land for 50 years.
The provisions to rent the government land would be made further simplified with a target to end unemployment and ensure favourable industrial environment, Minister Sharma said.
Shekhar Golchha, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said that the budget is focused on industry, agriculture and the issues raised by the private sector has been addressed.
President of the Confederation of Nepalese Industries Vishnu Kumar Agrawal remarked that the suggestions given to the government have been included in the budget. The private sector’s umbrella organization is preparing to release their formal opinion by conducting a detailed study of the issues in the budget.
