Exporters, manufacturers to get cash incentive

KATHMANDU, FEB 25:

With the new Cash Incentive Regulation, both exporters and manufacturers will soon be able to enjoy the cash incentive facility. The Ministry of Commerce and Supplies (MoCS) in its cash incentive regulation draft has mentioned about allowing the facility for both exporters and manufacturers based on minimum value addition to products.

“We have already submitted our final draft to the high level committee which will make its final decision in a meeting this week,” said secretary at the ministry Lal Mani Joshi.

According to Joshi, the final meeting for the Cash Incentive Regulation will be organised within this week, which will approve the new regulation. “If the draft is approved, exporters and manufacturers will be eligible for cash incentive if their products fulfill the minimum value addition needed for an export based product,” he said, adding that the cash incentive percentage will now have a fixed interest rate and will be based on product.

The ministry also informed that there will be no cash incentive facility for exporters to India as the documentation system for exports to India

is not reliable. “Currently, we are not in a condition to allow cash incentive for exports to India,” said Joshi.

According to him, till there is a reliable system of export documentation, the ministry will not be able to give cash incentive for exports to India. Earlier, MoCS had said that there are some exporters who do not use the banking channel while exporting goods to India, which will give rise to fraudulent activities. MoCS has also suggested that the cash incentive be provided to only those exporters who can clearly show their banking channels.

After a cabinet decision on June 9, 2011, the government had developed criteria for cash incentive –– if a product has value addition of 30 per cent

to 50 per cent, the exporter will get cash incentive of two per cent, whereas if the value addition is between 50 per cent to 80 per cent, the exporterwill get three per cent, and if value addition is more than 80 per cent, the exporter will get a total cash incentive of four per cent.

However, due to various complications, the cash incentive procedure was withheld for further simplification. From the time the cash incentive facility was launched, there have been disagreements between the government and industrialists due to the complicated value addition verification process.

Citing a number of complications and low number of recommendations, the Ministry of Industry approached MoCS to develop a new module for the cash incentive process.

The Department of Industry (DoI), till date, has recommended the names of 45 industries for cash incentive. There are more than 90 applicants in the pipeline for value addition verification.

DoI has recommended a total cash incentive of Rs 110 million for 45 industries from the total budget for the cash incentive programme.

Source: THT