November 3: The Finance Committee of the House of Representatives has expressed concern over the provisions introduced in the Financial Act 2078 regarding import of sponge iron and billet. The committee recently held discussions with the industrialists about the impact of the new provision and ways to mitigate the effects.  

The committee had called both the opposing and supporting members of industries for the discussion on November 2. Pradip Kumar Shrestha, managing director of Panchakanya Steel, said that the new provisions had put the entrepreneurs in a very difficult position. According to him, the newly introduced provisions have revised the customs duty and excise duty making it difficult for them to operate the industry. 

"If the new provisions are not changed high-quality steels cannot be produced in the country. Our companies will lag behind in competition resulting in low quality steels which is unethical so an alternative must be provided," said Shrestha. He argued that the government's policy will result in the closure of 24 industries and benefit the remaining six industries.

The new policy has exempted customs duty and excise duty on the import of sponge iron, a raw material used to produce steels and has applied 4.75 percent customs duty on the import of billets. Shrestha claimed that billet will expensive by Rs 5.50 to Rs 6 at the customs point due to the excise duty of Rs 250 per 2,500 metric tons of billet. 

Industrialists have demanded that both raw materials which Nepal do not produce should be given same level of exemptions. They have suggested that sponge iron be subjected to excise duty and pollution tax while excise duty should be levied only on the production and sale of finished goods instead of importing raw materials from the customs point.

Billets is expected to be dearer by Rs 7 at the customs point. Kiran Saakha, managing director of Sakh Steel Industries, said that there is no alternative other than shutting down around twenty four industries due to the new policy introduced by the government.

 He claims that the entrepreneurs are not paying revenue due to the government's policy towards this industry which has an investment of Rs 150 billion. "If the new policy is not revised, not only the industrialists but the government will also lose a lot of revenue," said Saakha.

Former finance minister Surendra Pandey said the policy risks losing billions of rupees of investment so the issue must be immediately discussed with the Ministry of Finance.

Lawmaker Motilal Dugad also said both groups of steel manufacturers have been affected by the new policy. Since these industries pay huge amount of revenue to the government, their problems must be addressed.