MoCS Proposes To Lower ARF On Indian Farm Imports .

As a part of implementing the agreements signed during bi-lateral trade talks held with India four months ago, the Ministry of Commerce and Supplies (MoCS) has proposed to the government to gradually reduce Agricultural Reforms Fee (ARF) imposed on Indian farms products -- a move that may weaken competitive power of Nepali farm goods.

Nepal has been levying 5 percent ARF on imports of India farm products.

India during the bilateral trade talks had strongly pushed for complete elimination of the ARF, claiming that the fee goes against the spirit of national treatment promised for Indian goods in Nepal.

However, Nepali trade experts have been opposing the reduction in ARF, which they say would destroy the market of local farm products.

Due to lower subsidy and other incentives from the government as compared to India, Nepali agricultural products are facing tough competition from Indian farm products that are available at cheaper price in domestic market.

Nepal imported goods worth Rs 214.26 billion in fiscal year 2009/10 and Rs 165.11 billion in 2008/09.

“We have proposed to the Ministry of Finance to gradually reduce ARF on Indian farm products, as per the agreements signed during Inter Governmental Sub-Committee (IGSC) meeting between Nepal and India,” Chandra Kumar Ghimire, joint-secretary at the MoCS, told Republica on Monday.

“Reduction of Other Duties and Charge (ODC) under the World Trade Organization (WTO) agreement also require waiving off import duties.”

In another good news for Indian exporters, the MoCS has also proposed to the government to increase margin of preference -- on Indian goods. If the margin of preference is raised, it would make Indian products more competitive in the Nepali market.

“We have recommended increasing the margin of preference for Indian goods by 5-7 percentage points,” said Ghimire. Nepal´s margin of preference for Indian imports stand at 7 percent. The southern neighbor has been demanding that Nepal raise the rate to 20 percent.

In a bid to promote exports, the MoCS has also proposed different incentives, including waiver of export duty, reduction of import duty on raw materials and exemption of other taxes, to around a dozen products. The produces selected for the incentives are black cardamom, ginger, pulses, honey, tea, jute, handicraft, medicinal herbs, carpet, betel nuts and tanned leather.

The ministry has also proposed to the government to from Jute Board to promote jute farming and increasing its productivity.

Source : myrepublica.com