Nepal’s strict customs duty hits trade in Bihar’s border markets - The Times of India

Nepal has significantly increased customs duties on a range of goods imported from India, leading to a severe downturn in cross-border trade, particularly impacting markets along the Bihar border. This policy change, implemented by the Nepal government during the current fiscal year, has caused trade volumes and revenue generation for Nepalese traders to plummet by an estimated 70-80% in key border markets such as Raxaul, Birgunj, and Jogbani.

The duty hikes affect several categories of Indian goods, making them considerably more expensive for Nepalese consumers and businesses. Specific increases include:

• Customs duty on saree (sari) has doubled from 15% to 30%.
• Customs duty on lungi (a traditional garment) has risen from 10% to 20%.
• Other general clothing items have also seen their customs duty increase from 10% to 20%.
• Shoes are now subject to a customs duty of 40%, up from 20%.
• Plastic items have experienced an increase from 15% to 30%.
• Customs duty on iron items has doubled from 10% to 20%.

These substantial increases have created significant hardship for Nepalese traders who rely on Indian imports. Many are struggling to cover operational costs like rent and employee salaries, with some even contemplating closing their businesses. The economic pressure has also inadvertently fueled a surge in smuggling activities across the border, as individuals seek to circumvent the higher official duties. While the immediate impact is felt by Nepalese importers and consumers facing higher prices, Indian exporters to Nepal are also affected by the reduced demand for their goods.

For importers, customs brokers, and trade compliance officers engaged in cross-border trade with Nepal, these developments underscore the critical importance of continuously monitoring policy changes in partner countries. Businesses should reassess their market strategies and supply chains to account for the altered cost structures and reduced demand. Understanding and adapting to these regulatory shifts is crucial for maintaining compliance and navigating the evolving trade landscape, especially as increased duties can lead to market distortions and a rise in illicit trade practices.