First Business News Portal in English from Nepal
KATHMANDU: A decision by Finance Minister Janardan Sharma, in the name of reducing trade deficit by boosting domestic production, has put the Rs 100 billion invested steel industries in trouble.
As per industrialists, 24 steel industries in the country could collapse following decision of the government to increase excise duty and other through the Replacement Bill of the budget ordinance. Finance Minister Sharma took decision to this effect to benefit only six of the 30 steel industries currently operating in Nepal, industrialists charged.
If the decision is not reversed, 24 industries will have to close down, they said.
In the revised budget, a provision has been introduced whereby no customs duty or excise duty will be levied on the import of sponge iron, the raw material required for the production of iron rods by melting the sheets. However, customs duty has been increased from Rs 4.75 per metric tonne and Rs 1,650 per metric tonne to Rs 2,500.
The government has increased the excise duty on billet imports by giving a discount on the import of sponge oil and the industry will have to close down due to the increase in the price of steel.
Sponge iron and billet are both raw materials and the steel industries have been importing sponge iron and billet to produce iron products including bars. Only six industries in Nepal use sponge iron while others use billet.
Kiran Sakha, vice-president of the Rolling Mills Association, said the government was trying to shut down the remaining 24 industries by giving tax and excise exemptions to only six industries. “Billet rods are of better quality than sponge iron. But the government has put steel-producing industries in trouble by importing billet,” he said.
Anjan Shrestha, director of the Siddhi Laxmi Steel, said the government has brought a policy that will have a negative impact on the private sector even if it wants to create an investment-friendly environment. “It is not right time to bring different policies twice in the same fiscal year. The government should discuss with the private sector before introducing any new policy,” he said.
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