September 9: The government has prepared a draft to amend the 'Export Subsidy Procedure 2075' proposing a minimum of 4 percent cash subsidy for the export of various goods.

The Ministry of Industry, Commerce and Supplies prepared the draft in line with the announcement made in the budget of the current fiscal year (2022/23) to increase the cash subsidy up to 8 percent. Accordingly, the minimum limit of the subsidy given for exports has been fixed at 4 percent.

The ministry prepared the draft to provide subsidy for the export of 29 different items and has submitted it to the Ministry of Finance. According to sources, the 29 items included in the list will get subsidies of 4 to 5 percent. IT-based industries and business outsourcing services will not receive subsidies.

Sources informed that the share of cash subsidy will be increased for items that will receive a collective trademark. The maximum limit for export subsidy is 8 percent.

“However, we have not drafted a procedure to give 8 percent to any specific item. The subsidy limit will decrease based on criteria such as the quantity of raw materials, ie, value addition, collective trademark and whether or not exports have increased this year compared to last year,” said the source.

An official of the ministry said that the procedure is being prepared so that the export can be increased with government subsidies which will be gradually be increased to 8 percent.

 “Eight percent cash subsidy will not be given all at once, because the subsidy should be progressive and also serve as an encouragement for increasing exports,” said the official, adding, “However, cash subsidy for export of services will not be provided as per the budget announcement.”

As the country’s trade deficit is increasing, the government has been giving subsidies to encourage export-oriented industries and increase production. Items currently exported from Nepal including processed tea, processed coffee, handicraft and wooden products, processed leather (crust) and leather products, handmade paper and products made from it, processed herbs and essential oils, processed stones and jewelry with stones, allo products, mineral water, turmeric, vegetables, flowers, processed honey, processed cardamom and processed ginger get cash subsidy.

Similarly, domestically-produced garments, ready-made garments, carpets, mountain goat, pashmina fabric, indigenously processed jute and jute products, gold and silver jewelry, semi-processed leather, pharmaceuticals, felt, polyester/yarn/fiber, viscose yarn/acrylic yarn/cotton, copper goods and footwear are also included in the items entitled to receive subsidy. Cement, clinker, steel are also included in the list to get subsidy from this year.