Garment exports to India run into customs hassles

By Milan Mani Sharma

KATHMANDU, Sept 3 - India has imposed new barriers on the entry of Nepali readymade garments following which exports of even top brands like John Players, Peter England, Ituchu and Pantaloons have come to a standstill from last week.The problem surfaced when Indian customs officials ...

"As the MRP is always higher than the invoice rate - the price at which producers deliver the products - the change in the base price has instantly increased the volume of the duty by two- to threefold," said Uday Raj Pandey, vice president of the Garment Association of Nepal (GAN).

The change in India's customs policy, which came without notification, has left some Rs 40 million worth of consignments stranded at Panitanki customs. "What's worse, it could adversely impact fresh orders in the pipeline if not addressed immediately," Pandey told the Post.

India has been imposing 4 percent customs duty on Nepali cotton garments and 8 percent duty on polyester garments. It has also been levying an additional 4 percent countervailing duty on these exports.

Apart from the base price, experts said Indian customs had also announced that they would accept the laboratory test results of New Delhi-based quality certifiers only.

"This is clearly a non-tariff barrier. It has not only increased hassles, but also extended the consignment delivery date by at least four days," said Pandey. Previously, test certificates of Kolkata, Patna and nearby laboratories were accepted.

In yet another hassle, Indian customs is presently imposing the duty structure of polyester items on cotton items even if their polyester content is very low. In the past, the duty structure of polyester was imposed on apparels that contained over 51 percent polyester.

Exporters, furthermore, charged that such a change of base was against international norms and global understandings on customs harmonization and taxation.

"The imposition of customs duty on garments already contravenes the trade agreement the two countries have signed," said a trade expert.

Citing past experience, experts opined that the emergence of the problem at a time when the prime minister was about to visit New Delhi could hint at some veiled agenda of India.

The bilateral trade regime governing Nepal-India trade allows duty-free market access to Nepali exports, except for three items in the negative list and five items on quantitative restrictions. "And readymade garments are definitely not in the negative or quantitatively restricted list," said an official at the Ministry of Commerce.

The Industry Ministry had already asked the Indian government in writing to scrap the changes, he said.

The Nepali garment industry, which was close to collapse, has got a new lease on life thanks to rising demand for denim, corduroy, linen, viscous and polyester garments in India.

As the quality of Nepali exports were widely acclaimed, local industries were receiving increasing numbers of orders from leading Indian retailers like Big Bazar, Pantaloon, Ituchu, Peter England and John Players, among others.