Nepalese apparel sector will benefit from India's reduction of additional tariffs

India decided to put an end to the additional tariffs on Nepal's 162 export products, including textiles and apparel products, with a view to working hard to provide Nepalese exporters with some help. Nepal's garment industry may benefit from this.

In 2006, India imposed a 4% additional tariff on 331 Nepalese products. Then in 2008, the customs duties of 169 products were ended. However, the remaining 162 products are still taxed, and once India ceases taxation in March 2012, the additional tax on these products will be terminated.

Mr. Purushottam Ojha, Minister of Commerce of Nepal stated that all textile and apparel products in Nepal will be exempted from additional customs duties. In recent years, Nepalese garment manufacturers have begun to export to the Indian market. Some companies are also producing textiles for Indian exporters; they produce semi-finished products, and the rest of the added value is completed in India, and then the final product is exported to a third country. Therefore, the garment industry and contract manufacturers in Nepal will benefit from the additional tariffs on textile products from India.

He added that in the past, Nepalese garment industry employed a large number of people. However, due to the decline in apparel exports, many businesses have closed down. Now, India's waiver of additional tariffs will surely have a positive impact on Nepal's exports and increase Nepal's exports to India.

In turn, this will promote job creation in the garment industry and people can have better income. The existing trade gap between India and Nepal will also narrow.