Exporters await delayed government subsidies

Despite applying for government-announced subsidies two years ago, large Nepali industries exporting goods worth over Rs 500m have yet to receive the promised financial support. The subsidies, aimed at boosting exports and addressing the trade deficit, were introduced in Oct 2022 with a provision offering up to eight percent cash back for qualifying industries. However, bureaucratic hurdles and government delays have left industries waiting for payments, adding to their frustration.

Industries such as yarn, cement, clinker, steel, bottled water, information technology, and business process outsourcing had applied for the subsidies under the scheme. Despite their compliance with the application process, the government has failed to deliver on its pledge, citing lower-than-expected revenue as the reason for the delay. The unpaid subsidies are estimated to have exceeded Rs 2bn.

In addition to the export incentives, the government owes around Rs 50bn to the construction industry, Rs 13bn for covid insurance, and millions more for agricultural insurance. Industrialists have expressed their discontent, claiming that while they are expected to pay taxes on time, the government has not honored its subsidy commitments.

The subsidy process involves navigating through multiple government departments, including customs, the Department of Industry, Nepal Rastra Bank, and the Ministry of Finance. Some applications from last fiscal year remain unprocessed, further aggravating the situation.

A delegation from the Federation of Nepalese Export Association (FNEA), led by its chairman, Pawan Golyan, met with Finance Minister Bishnu Paudel to address the issue. While Paudel acknowledged the budget constraints, he promised to resolve the issue and set a deadline for the release of payments. However, no progress has been made so far, leaving industrialists disappointed with the lack of government action.

Many industrialists have criticized the government’s failure to deliver on its promises, questioning why the subsidies were announced in the first place if the government was not prepared to follow through. With the private sector initially welcoming the export promotion program, the continued delays have dampened their enthusiasm, hindering industrial growth and investment.