Excise Duty on Raw Materials Affecting Export of GI Wire

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Excise Duty on Raw Materials Affecting Export of GI Wire

November 18: Five galvanized iron (GI) wire industries in the Sunsari Morang Industrial Corridor, which had been closed for four months, came into operation after a cabinet meeting revised the tax rate. However, the excise duty levied at the rate of Rs 4,500 per ton on mild steel (MS) rod, the raw material required for the GI wire industry, has stood as a hindrance in the export of GI wire.

Until four years ago, GI wire worth Rs 3.5 billion used to be exported from Nepal every month. Five industries of Sunsari Morang Industrial Corridor used to export wire equivalent to that amount. It also contributed to the foreign exchange reserves obtained from exports. However, recently, the government decided that no excise duty would be levied on GI wire products, but an excise duty of Rs 4.50 paisa per kg would be levied on the import of its raw material. As a result, the exports decreased because the industries could not compete with Indian products.

According to the data of Biratnagar customs, the export of GI wire which was 22,740 tons in the year 2018/19, has decreased to 672 tons in the year 2021/22.

Anil Sharda, general secretary of Morang Trade Association and owner of Pioneer Wires, said that although the government has tried to give concessions to the wire industry, the export has been affected by the ambiguity of the relevant laws.

He claimed that the industry, which was working at a profit of 50 paisa, had to pay Rs 4.50 per kilo on the import of raw materials. So it could not compete with Indian products. It forced the industries to cut production by 60 per cent.



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