Indian government had released a notification to levy excise duty on jute products from Nepal, Sri Lanka and the Maldives in 2015, it only started enforcing the notification from December 15 last year, according to jute traders.

Following, the enforcement of the excise duty of 12.5 percent on different jute products like jute sacks and hessian jute fabric. Nepali traders said that jute export to India has been halted completely for more than three weeks

India is Nepal’s largest importer of jute products. As per traders, more than 90 percent of Nepali jute products are exported to the Indian market.

India enforcing excise duty on different jute products is against the Nepal-India Trade Treaty, which guarantees duty-free access to Nepali products in the Indian market, said Raj Kumar Golchha, president of Nepal Jute Industries Association.

According to Golchha, India, however, has not imposed excise duty on jute yarn and it is being exported without any hassles. Following the Indian move, jute traders have said that a huge quantity of jute products have piled up in different domestic jute factories.

According to traders, Nepal produces 200 tonnes of jute products every day and only 10 percent is consumed in the domestic market. Domestic traders import almost 70 percent of raw materials for the jute industry from India itself and exports only finished products.

Golchha said that the Indian government is obliged to remove the tax that has been levied on Nepali jute products. They have taken up the issue with the Ministry of Commerce (MoC) and Embassy of India in Nepal and they have received positive vibes that the Indian government will allow Nepali jute products to enjoy duty-free access in the Indian market.

Government officials too expect India to lift the tax levied on Nepali jute products soon.

The Embassy of India in Nepal has said that concerned authorities in India are currently in discussions over the issue of levying excise duty on Nepali jute products.

The MoC Joint Secretary Rabi Shankar Sainju said that they have written a letter to the Indian government urging it to roll back its decision to impose excise duty on jute products as soon as possible.