Customs duty on ghee imports hiked by 5 percent

KATHMANDU, July 22:

The government has increased customs duty on ghee imports by 5 percentage points in a bid to make ghee produced in the country more competitive.

Through the budget for Fiscal Year 2015/16, the government raised customs duty on butter, and other fats and oils derived from milk to 20 percent. The announcement comes at a time when cheaper foreign dairy products, especially ghee, are flooding the market, eroding competitiveness of domestic dairy products. Diary entrepreneurs say they have around 3 million tons of ghee worth Rs 1.5 billion in stock as imported ghee are cheaper than locally produced ones.

"We have increased customs duty on ghee imports to make domestic brands more competitive in the market," Sishir Kumar Dhungana, director general of Department of Customs (DoC), told Republica, adding, "The 20 percent duty will be levied on price declared by the importer."

Entry of cheaper ghee from India, especially by Patanjali Yogpeeth, had left state-owned Dairy Development Corporation (DDC) as well as private dairy firms worrying. While Nepali ghee costs Rs 750 per liter, Patanjali ghee was retailing at Rs 720 per liter.

"Availability of Indian ghee at cheaper price has been affecting our sales. As our stock of ghee is piling up with every passing day, we welcome the decision to raise customs duty on ghee imports," Sumit Kedia, president of Nepal Dairy Association, told Republica. "Along with hike in customs duty, the government also needs to raise customs valuation of imported ghee."

Kedia also said domestic dairy producers have not been able to pay farmers in time because of drop in sales due to availability of cheaper imported dairy products. "If the situation is not changed, it will be difficult to collect milk from farmers," he said, adding: "We might have to declare milk holiday."

Officials of DDC also admit that availability of cheaper Indian ghee in the market has affected sale of domestic brands.

DDC had reduced price of ghee by Rs 10 per liter to Rs 740 two months ago to make its product competitive.

Meanwhile, Dhungana said the department might increase custom valuation of ghee and other dairy products if need be. "We will take decision on the issue after conducting necessary study," he added.

Source: Republica