July 31: Nepal Rastra Bank (NRB) and the Government of Nepal has imposed restrictions since last winter in order to minimize the impact of Nepal’s trade deficit on foreign exchange reserves. After the foreign exchange reserves started declining, the central bank issued a quota system on import of silver on November 29, 2021 restricting the import of silver worth more than USD 3500 at a time.

Three weeks later, the NRB introduced a provision on December 20 requiring 50 to cent percent cash margin for importing goods under 20 different harmonic codes.

The central bank also lowered the limit on imports through document against payment (DAP), document against assessment (DAA) and TT.

One month later, the central bank added 27 more items to the list of goods that require 50 to 100 percent cash margin for imports.    

After these steps failed to discourage imports, the central bank in early April issued a verbal directive to the commercial banks not to open LC for the import of luxury items such as vehicles for private use and liquor.

On top of it, the Ministry of Industry, Commerce and Supplies issued a notice in the Nepal Gazette on April 26 banning the import of certain goods till the end of the last fiscal year (FY 2021/22). Those goods included vehicles for private use, motorcycle of more than 250 cc capacity, smartphones worth more than USD 600, television sets of 32 inches and above, playing cards, diamonds, ready-made liquor, chips such as Lays and Kurkure, toys and tobacco products. The ban on imports of those products was later extended till August 30.  

It seems that the government tried to restrict the imports of the same goods towards the end of the fiscal year that were imported without any hindrance during the start of the last fiscal year. Those ten goods were completely banned in the last two and a half months of the last fiscal year. Despite the ban, the import of three of the ten items have declined while the import of the remaining seven items has increased instead, according to the date released by the Department of Customs.

During the review period, the import of chips such as Lays and Kurkure, playing cards and vehicles of more than 250 cc capacity has declined. On the other hand import of products such as liquor, tobacco products, smartphones, toys, diamond, vehicles and television sets has increased.