September 21: Three out of five Galvanized Iron (GI) wire industries in Sunsari-Morang Industrial Corridor, which were closed due to the increase in customs duty and excise duty on the import of raw materials, have come into operation again. After the tax rates increased in the budget was revised by the decision of the Council of Ministers, the closed industries resumed operation. In the meantime, the remaining two industries are also preparing to resume operation.
Premier Wires Pvt Ltd, Hulas Wire Industries Ltd and Pioneer Wires Pvt Ltd have started production after the tax rates were revised, while Kamala Wire and Arihant Wire are preparing to start production within a few days. Those industries were closed for four months after the finance minister increased the customs duty and excise duty on the raw material of GI wire through the budget of the current fiscal year. More than 2,000 workers were unemployed due to the closure of industries.
Managing Director of Premier Wires Saurabh Sharda said that although the tax rate increased by the finance minister was revised by the decision of the Council of Ministers, the Nepali industries are not able to export GI wire to India due to the excise duty imposed since the last three years. He informed that the industries could not start production immediately because it took time to arrange raw materials, workers and machinery.
Finance Minister Janardan Sharma had increased the customs duty on Mild Steel (MS) wire rod, the raw material required for this industry, from 5 to 10 percent. The rate of excise duty was also increased from Rs 2.50 to Rs 4.50 per kg. India also started levying 15 percent customs duty on the export of MS wire to protect its industry. As a result, it became impossible for the Nepali industrialists to sustain their business.
Anil Sharda, general secretary of Morang Merchant’s Association and operator of Pioneer Wire said they had to pay a total of 29.5 percent revenue on the import of MS wire including India's export duty, Nepal's import duty and excise duty. So they had to close the industry and started protest on the streets. However, he added that the government saved the industry by addressing their demands even though it was a bit late.
Suyash Raj Pyakurel, president of the Chamber of Industry, Morang, said that due to the excise duty imposed on raw materials, the export of GI wire, which was 22,740 metric tons in the fiscal year 2018/19, dropped to 672 metric tons in the fiscal year 2021/22. He said that up to 40,000 tons of GI wire can be exported from Nepal annually if Nepal removes the excise duty and India removes the export duty. According to him, Nepal can earn Rs 6 billion from the export of GI wire.