October 12: Even though the government has revised the unequal tax rates, the sanitary pad industries of Nepal have not been able to operate at full capacity because of excessive import of sanitary pads from abroad.

There is an annual demand of 450 million sanitary pads in Nepal. Industrialists say that the annual production capacity of 35 small and big domestic industries is 900 million units. However, as the government has not controlled the import of pads, the investment of Rs 6 billion in the pad industry is at risk.

According to Dolraj Adhikari, president of Nepal Sanitary Pad and Diaper Manufacturers Association, although the government revised the decision to give 90 percent tax exemption on the import of sanitary pads as per the announcement made in the budget of the current fiscal year, it is yet to increase the customs duty to the previous level of 15 percent from 5 percent.

As a result, the production of the domestic industries has shrunk by 50 percent.

The industries that were producing 600 million sanitary pads and selling them domestically and abroad before the government imposed unequal taxes were forced to shut down due to the government's decision. After revising the tax rates, those industries are now operational. However, as the government is yet to control the import of sanitary pads, the industrialists are not able to take full advantage of it, says President Adhikari.

Puneet Sharda, general secretary of the association and owner of Jasmine Hygiene, says that the production of the domestic industry is now limited to 300 million units per year. Similarly, out of 6,000 workers, only 3,000 are currently employed.

“The government should not only reduce the customs duty on raw materials, it should also reduce the customs duty on packaging materials and other goods. The government should give concessions to encourage domestic industries,” he said.

According to Adhikari, the government should stop issuing license to new sanitary pad industry as the existing industries have acquired technology that can produce seven pads in one second.

 “There is not a single sanitary pad industry in Bihar, India. However, six large industries have already opened in a small country like Nepal. Since the capacity of those industries exceeds the domestic demand if operated at full capacity, now the government should open the way to earn foreign currency by exporting pads instead of importing them. In order to do so, the government must give concessions on exports,” said Adhikari.

Rakesh Lahoti, vice president of the association and owner of Health and Hygiene said that although the government revised the unequal tax rates, it has failed to notice that the industries here are not operating at full capacity due to excessive imports. He said that the government should give concessions to the sanitary pad industry like in India. He argued that they have to compete with the industries capable of producing more than 400 pads in a minute. Lahoti revealed that Nepali industry will be able to produce at full capacity only if the government increases the anti-dumping duty and customs duty to 15 percent to replace imports. The government's policy of encouraging imports has also affected the production of diapers.

After the government decided to waive 90 percent customs duty on the import of sanitary pads from July 17, pads worth Rs 992 million were imported that month. Records of the Customs Department show that pads worth Rs 154,441,000 were imported in August. These pads were imported from India, China, Thailand, Japan and other countries. During the period of 2 months, 8,339,000 thousand pads were exported from Nepal to India. Pads come to Nepal from abroad in kilograms.

In the year 2075/76, when the government reduced the customs duty on all raw materials of the sanitary pad industry to 5 percent, the number of such industries increased.