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India re-imposes CVD on clothing imports from Nepal
Mar '11
India's move of subjecting the readymade garments (RMG) to a countervailing duty (CVD), has badly hit the Nepali exports which had just begun to recover from the impact caused due to imposition of the same duty, till recently.

Previously, such duty imposition used to be on bilateral basis, but this time India has subjected all the countries involved in garment trade with it, to levy of such duty. The Indian government reinstated the duty through the recently announced 2011-12 Budget.

Pursuant to the Indian government's move the Nepali garment sector is apprehending that, such levy would reduce their competitiveness in the Indian markets.

The reinstatement of the duty is looked upon as a major blow to the RMG industry of Nepal, which had just started enjoying positive growth in the Indian markets.

During the last financial year, Nepal exported RMG products worth around Rs one billion to India. After major dislocation from the US market, the Indian market has been breathing in a new life in the Nepal's garment exporters.

However, post duty imposition, the Nepali exporters are discussing and gearing up to formulate a strategy to reduce their RMG cost, so as to confront the difficult situation and to maintain its stand in the Indian market.

T-shirts, trousers and suits constitute to be Nepal's major exports to India. Meanwhile, some of the RMG exporters from Nepal even cater to India's big retail chains like Liverpool and Big Bazaar.

India which used to levy a four percent CVD on the maximum retail price (MRP) of the garment, exempted Nepal from the CVD duty imposition a year back.

The Nepali RMG exporters were already facing adversities due to end of the duty-free quota regime in the US markets, which continued to be Nepal's biggest export market for RMG from December 2004 till expiry of the preferential treatment.

Nepal, with such preferential treatment, exported around Rs. 12 billion worth RMG products to the US in 2001-02.

The country during 2009-10 exported RMG worth one billion rupees to the US and worth three billion rupees to various EU nations.

Fibre2fashion News Desk - India

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