December 10, 2024
KATHMANDU – Manufacturers and exporters say they are in a dilemma over trade with India following the restrictive measures imposed by New Delhi on Nepali goods. Making matters worse is the Nepali government’s silence even though the goods have not been sold to India for months.
Dol Raj Adhikari, president of the Nepal Sanitary and Diaper Association, said sanitary pads and diapers worth of Rs250 million had been stranded in the warehouses for the past three months.
“We completed all the processes to acquire the Bureau of Indian Standards [BIS] certificate to export our products, but no team from India is coming to inspect the factory. We even wrote to the Indian authority multiple times but our requests have fallen on deaf ears.”
As per the provision, once the Indian inspection team gives a green signal after factory inspection, goods can be exported to India.
In 2020, the Indian government asked the BIS to prescribe mandatory standards for imported goods in line with international quality norms. The move aimed to prevent Chinese goods from entering India from any of its neighbours.
After the suppression of Chinese apps, the Indian government imposed import restrictions on more than 370 Chinese products.
Insiders say India does not want any products from Nepal that have Chinese components, including Nepal’s hydroelectricity, greatly worrying Nepal’s top exporters.
The BIS deals with the marking and certifying of goods, incorporating quality standards and information on international norms to be followed while importing.
The rules worry Adhikari, who owns the AG Health Industries Private Limited that produces sanitary pads and diapers in Bhairahawa. “India seems intent to halt imports from Nepal,” said Adhikari.
According to the association, Nepal used to export three truckloads of sanitary pads and diapers daily. There are 29 sanitary pads and diaper factories in Nepal, both large and small, employing 6,000 workers.
Sanitary pads and diaper factories used to operate 12 hours a day when the demand boomed, but due to the export obstacles, factories have reduced operating hours by 4 hours, said Adhikari.
According to the Department of Customs, Nepal exported 201.99 million pieces of sanitary pads and diapers worth Rs719 million to India in the last fiscal year, ending mid-July.
Likewise, a big consignment of Goldstar shoes failed to get export clearance after India refused to issue the BIS certificate, putting Nepal’s homegrown shoemaker on the brink.
Exporters said there were rumours on Friday that India had extended the deadline to obtain a BIS certificate, and the Nepali exporters were allowed to export goods with their existing certificates.
“But we have not received any formal notice from the Indian authority on the time extension of the BIS certificate,” said Baburam Adhikari, spokesperson for the Ministry of Industry, Commerce and Supplies. “If the BIS had made such a decision, we would have been informed.”
“Neither the BIS India nor the domestic industries has confirmed or communicated with us on the issue.”
After Nepali exports were halted over the BIS issue, the industry ministry has written multiple times to its Indian counterpart.
Meetings were held, and the issue was forwarded even during Industry Minister Damodar Bhandari’s visit to India in August. “However, there is no progress,” said Adhikari.
Adhikari said none of the Nepali exporters who applied for the BIS certificate have gotten it till now.
“The BIS certificate issue has put the industries in Rupandehi in a big dilemma. They were opened to export goods to India,” said Thakur Kumar Shrestha, president of the Siddhartha Chamber of Commerce and Industry. It has negatively impacted both the industries and Nepal’s trade.
Shrestha said factories are either running at half capacity or getting shut down, and workers are being laid off.
Exports from the cement makers in Rupandehi—such as Arghakhanchi Cement, Sarbottam Cement, Palpa Cement, and Balaji Cement—have completely stopped for nearly two months.
“Even as the domestic consumption of cement declined, production was not impacted due to the huge demand from India. But now cement plants in Rupandehi are on the verge of shutting down or running under-capacity,” said Shrestha.
Except plywood, the export of all the listed goods that require a BIS certificate has come to a halt, said Shrestha. “India has neither renewed the certificate nor provided a new one.”
Goods under the BIS with compulsory certification are any variety of cement manufactured or sold in India, steel and iron products, chemicals, fertiliser, polymers and textiles, cables, flat transparent sheet glass, cattle feed, footwear, centrifugally cast (spun) iron pipes, jute bags, viscose staple fibres, geo textiles, portable water bottles, plywood, and wooden flush door shutters, among others.
“Plywood is currently not restricted. But despite having already paid the BIS charges and completed the process, the inspection team from India has not provided a BIS certificate for Nepali goods,” said Hom Prasad Ghimire, president of the Nepal Plywood Manufacturers Association. Ghimire said that his company completed the process of getting the BIS certificate in June.
He said the Nepali plywood is of better quality than the Indian plywood.
Plywood has been given until March 2025 for certification-free export.
He said that out of 80 plywood factories, 52 have even deposited charges to obtain the certificate. The plywood industry employs 25,000 workers across the country.
According to the association, Nepal exported Rs8 billion worth of plywood to India. The volume could have increased had the exports not been interrupted.
Trade with India has been repeatedly obstructed. Experts say there is a need to seek long-term solutions for uninterrupted trade with the southern neighbour.
“There must be a mutual recognition agreement on select exportable items. Under such an agreement, exportable goods certified by the government will be recognised by the Indian government. This would be the best long-term solution for standard certification,” said Posh Raj Pandey, chairman of the South Asia Watch of Economics, Environment and Trade.
Under the 2009 bilateral trade agreement with Nepal, India agreed to support the setting up of standard-purpose labs, said Pandey. However, Nepal has not been able to push for the labs during talks with India— even after 15 years of the agreement.
He said lack of coordination among government agencies and frequent changes of bureaucrats have put the issue on the back burner.