October 16: The government has decided to enfore the ban on the import of cars, jeeps, vans, readymade liquor and motorcycles of more than 150 cc capacity and smart phones worth more than US$300 until mid-December.

The ban imposed on the import of these items on April 26 was to expire last Friday. However, the Ministry of Industry, Commerce and Supplies published a notice on the Nepal Gazette on Friday extending the ban period. As the foreign exchange reserves were under pressure, the ministry had initially published a notice on the Nepal Gazette on April 26 and banned the import of 10 luxury goods.

Among the 10 items, the ban on food items like crisps along with color televisions larger than 32 inches, playing cards, diamonds other than raw materials, cigarettes and tobacco products and all kinds of toys was removed on August 29.

The ministry, however, extended the ban on import of four items using the powers given by Sub-section 1 of Section 3 of the Export Import (Control) Act, 2013. According to the ministry, the purpose of the ban is to protect the country's external financial sector and balance of payments by preventing deficits of the foreign currency or by increasing the extremely low foreign currency reserves.

The government had been tightening imports since last winter. Initially, Nepal Rastra Bank set a limit on import quota of silver. Last December, the central bank had made arrangements requiring 50 and 100 percent cash margin for opening LC for the import of luxury goods.

The chief executive officers of commercial banks were verbally instructed by NRB to avoid opening LCs for the import of vehicles for private use. Eventually, as a last resort, a formal ban was imposed on the import of luxury items on April 26.

The importers have been claiming that despite the ban imposed by the government, the import of other goods except two-wheelers and four-wheelers never stopped.

Madan Mittal, former secretary general of Nepal Foreign Trade Association, says that the ban on the import of goods other than vehicles and large machinery tools has only give an opportunity to the smugglers to bring such goods into the country through illegal channels.