The government has removed quantitative restrictions on the import of betel nuts, peas and pepper, raising specific concerns regarding smuggling of these imports. 

The Ministry of Industry, Commerce and Supplies announced lifting of import restrictions imposed on peas, betel nuts, and white and black pepper for industrial purposes for the fiscal year 2024-25 through a notice published in the Nepal Gazette last Thursday.

Businesspeople say that since there are not many industries in Nepal that use betel nuts as raw materials, most of the betel nuts imported into the country are smuggled to India where traders get a high price due to India’s high customs duty.

The government had initially banned imports on 24 March 2020 under Section 3 (1) of the Export Import (Control) Act, 2013, following increased smuggling of betel nuts, peas, pepper and dates. Later, the government lifted the ban by setting quantitative restrictions in the fiscal year 2020-21, allowing businesses to import 80,000 tons of peas, 25,000 tons of betel nuts, 5,000 tons of dates and 15,000 tons of whole pepper annually.

Officials say the new permission for imports is specifically granted for manufacturing industries to import these items as raw materials. The Department of Commerce, Supply and Consumer Protection must recommend the quantity of peas, betel nuts and pepper needed after verifying the requirements for industrial purposes.
However, the government has not specified import quantity limits, meaning industries can now import betel nuts, peas and pepper in any amount they choose. Previously, imports were only allowed within specifically defined quantity limits.

Middlemen, who stood to make substantial profits through smuggling, had been lobbying the government to remove the quantitative restrictions on the import of these items. Traders have been following a pattern of importing betel nuts, peas and pepper from other countries and smuggling them to India.

Indian authorities have seized more than 6,000 tons of betel nuts as of December in the fiscal year 2023-24. India levies a customs duty of $8,140 per ton, nearly five times higher than Nepal, which makes betel nuts much cheaper in Nepal.
Nepal imported 3,160.95 tons of betel nuts worth Rs 417.77m over the first six months of the current fiscal year. In the fiscal year 2023-24, Nepal imported 5,643.5 tons of betel nuts worth Rs 1.05bn. Betel nuts are primarily imported from countries, including Indonesia, Malaysia and Canada.