October 18: As the government failed to import sugar and also prohibited the private sector from importing the essential ingredient, the production of the chocolate and biscuit industries ended up shrinking to 50 percent of their full capacity.

The retail price of sugar in the Indian market is Rs 67 per kg while it costs as much as Rs 125 per kg in Nepal. Due to the open border, although sugar is smuggled into the Terai districts from the Indian market, there is a shortage of sugar in other districts. The industries that produce food items by consuming large quantities of sugar complained that their production could not increase even during the festive season because they did not get sugar easily.

After the government increased the customs duty on sugar imports two years ago upon the request of the sugar industry, the country has not imported sugar through the green channel of customs. Due to the lack of sugar, industries have cut production by up to 50 percent.

The production of biscuits, dairy products, sweets and chocolate industry, which are sold more during the festivals, has reduced by 50 percent.

The industries were operating at less than 40 percent of their capacity due to lack of demand in the market. But they increase their production during the festive season to cover up the expenses throughout the year. However, it was not possible this time due to the short-supply of sugar.

Mahesh Jaju, former president of Morang Trade Association and producer of juice, biscuits and confectionery said that the industries could not increase their production during the festival due to the lack of timely supply of sugar which he blamed on the government.

According to him, the production of biscuits, chocolates, sweets and confectionery, which are widely used as the main food during the festivals, normally increases during this time of the year. Complaining that government’s policy is only revenue-oriented, Jaju said that the customs duty on sugar should be maintained at 5 percent.

President of the Koshi Province chapter of the Confederation of Nepalese Industries and Constituent Assembly Member Pawan Sharada says that the demand for sugar is high during the festivals as food made from sugar is used the most during this time.

“After the sugar mills informed the government in mid-July that they had run out of stock, the government should have immediately allowed the private sector to import sugar. However, although the government gave permission to the Salt Trading Corporation and the Food Management and Trading Company to import 10,000 tons of sugar each, they have not yet been able to import sugar. As a result, the price of sugar skyrocketed and revenue is also being lost due to illegal entry of sugar from the open border,” said Sharada, adding, “The government knew that sugar is needed during the festivals. Not being able to import sugar on time is its carelessness.”

Sharada said that the government is losing revenue and the Nepalese market is not functioning as the consumers of the border areas go to the Indian market to buy sugar at cheap rate. Sharda demanded to allow the private sector to import sugar and maintain the customs duty at Rs 10 per kg.

Rakesh Surana, president of Industry Association of Morang, recalled that former Prime Minister KP Sharma Oli, when he was the prime minister, had declared the country to have become self-sufficient in sugar, but his claim turned out to be false.

Stating that the government imposes 40 percent customs duty on sugar and clothing, he said that both the items did not come from the green channel due to this very reason.

Surana opined that the government should reduce the customs duty so that sugar will be imported through the legal channels instead of the illegal ones. He argues that the revenue that the government could not collect in 4 months will be collected in 1 month if the customs rate is reduced. According to him, 320,000 metric tons of sugar is consumed annually in Nepal, while the domestic industry barely produces 80,000 tons.