Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has called on the government to immediately resume the cash incentive scheme for exports, warning that the suspension of the facility could severely affect investment, employment, and export performance in Nepal.
In a statement on Tuesday, the FNCCI said the government’s recent decision to halt the acceptance of new applications for cash incentives under the ongoing fiscal year 2082/83 (2025/26) has thrown exporters into uncertainty. The Department of Industry, following directives from the Ministry of Industry, Commerce and Supplies, issued a notice last Thursday stating that it would not accept new applications that could create additional fiscal liabilities this year. It also urged all stakeholders not to submit self-declarations related to the previous fiscal year 2081/82 (2024/25).
The FNCCI said the suspension comes at a time when Nepal’s export performance remains weak and the trade deficit continues to widen sharply. The federation emphasized that the cash incentive policy, introduced in FY 2068/69 (2011/12) to encourage the export of goods with domestic value addition, had been providing much-needed relief and motivation to Nepali exporters competing in international markets.
According to trade statistics, Nepal’s total exports increased from Rs 74 billion in FY 2068/69 to Rs 277 billion in FY 2081/82, reflecting modest progress. However, the country’s annual trade deficit remains alarmingly high at Rs 1.527 trillion, with the export-import ratio standing at 1:6.5 last fiscal year. In the first two months of the current fiscal year, the trade deficit has already reached Rs 257 billion, and the export-import ratio has worsened to 1:10.5, underscoring the growing pressure on the economy.
The FNCCI argued that cash incentives had helped sustain export-oriented industries and partially offset high transportation costs and logistical challenges, which are 25–30% more expensive in Nepal compared to neighboring countries. The federation warned that discontinuing the facility would undermine Nepal’s export competitiveness and discourage new investments in the sector.
“The export sector is already struggling due to high logistics costs, inconsistent policies, and declining global demand. Stopping cash incentives at this point could further weaken export growth, limit foreign exchange earnings, and threaten thousands of jobs,” the FNCCI said.
The business umbrella organization urged the Ministry of Industry, Commerce and Supplies to coordinate with the Ministry of Finance and reinstate the cash incentive scheme under the same provisions as previous years to promote export growth, import substitution, and foreign currency stability.
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