Incentive fails to rev up export revenues from listed products

February 25, 2019

Rajesh Khanal, The Kathmandu Post, February 25, 2019

Revenues from the export of products listed in the Nepal Trade Integration Strategy inched up 2.9 percent year-on-year in the first half of the fiscal year despite a cash incentive scheme for exporters. According to the Trade and Export Promotion Centre, export earnings from these products rose to Rs18.87 billion from Rs18.34 billion during the period mid-July to mid-January.

Raw leather exports suffered the biggest fall and dragged down total revenues. Shipments of raw leather were down by almost half, and were valued at Rs247.96 million during the period. This product was added to the hallowed list two years ago.

Medicinal herbs, yarn and textile products accounted for the largest share of the increase in exports. During the review period, shipments of medicinal herbs jumped more than twofold to Rs823.21 million. Govinda Ghimire, president of the Nepal Herbs and Herbal Products Association, said new products such as swertia (chiraito), soap nut (rittha), love apple (satuwa) and Sichuan pepper (timur) were finding a good market in third countries like Germany and France.

“These countries import the processed oil prepared from these medicinal products which is used as raw material,” Ghimire said. He added that exports of Nepali herbs to India were not encouraging these days as the Indian government had imposed strict barriers against herbs not included in the quarantine list. According to him, the southern neighbour has placed 18 herbs produced in Nepal in its quarantine list.

Yarn and textiles accounted for around Rs1 billion of export revenues. Nepal shipped Rs7.86 billion worth of these products during the review period, up 13.6 percent year-on-year.

According to the Trade and Export Promotion Centre, Nepali yarn is selling well in Turkey. “After the anti-dumping duty issue was settled a few months ago, exporters are eager to ship their products to Turkey as they fetch good prices there,” said Suyash Khanal, deputy executive director of the Centre. Bangladesh is the second largest market for Nepali yarn. “But this member country of the South Asian Association for Regional Cooperation has imposed non-tariff barriers,” Khanal said.

Exports of woollen carpets grew 13.5 percent to Rs3.78 billion and exports of pashmina products rose 4.1 percent to Rs1.43 billion. Export revenues from Nepal Trade Integration Strategy products were hit hard by a sharp drop in cardamom, footwear and ginger exports too. Cardamom shipments plunged 43 percent to Rs1.53 billion while footwear and ginger shipments were down 13.2 percent and 9.9 percent respectively.

The government gives a cash incentive of 3-5 percent for the export of products listed in the Nepal Trade Integration Strategy. Traders get a 5 percent cash incentive for exporting processed tea, large cardamom, ginger, leather goods and processed herbs and oil products with a value addition of at least 50 percent. Traders get a 3 percent cash incentive for exporting pashmina products under the Chyangra Pashmina brand, textiles, woollen carpets, and yarn made of polyester, viscose, acrylic and cotton.

Officials of the Ministry of Industry, Commerce and Supplies said the government could delist these products if they consistently show poor export performance, which means exporters will no longer receive a cash incentive. A ministry source said the government had removed honey, silver jewellery and handmade paper products from the list for the same reason.