Nepal’s imports of betel nuts during the first seven months recorded a three-fold jump over the figure of the whole of the previous fiscal year. Betel nuts worth more than Rs 1.25 billion entered Nepal through Kakkarbhitta Customs during the review period while
the shipments in all of fiscal 2012-13 amounted to Rs 529.4 million.
Imports have swelled despite a heavy rise in customs duty and customs valuation made by the government in a bid to discourage them. Most of the betel nuts are re-exported to India as domestic consumption is very low.
In order to discourage imports of betel nuts, the government has increased the customs valuation to US$ 750 per tonne from US$ 450, and the customs duty has also been hiked to 30 percent from 20 percent. “The rise in valuation and customs duty has failed to disocurage imports of betel nuts,” said Mukti Pandey, chief of the Mechi Customs Office. “Instead, they have been on the rise as if customs duty and valuation had been decreased.”
Looking at the trend of the last five years, there have been ups and down in betel nut imports.
In fiscal 2008-09, imports were worth Rs 1.62 billion which came down in the following three years. In fiscal 2010-11, imports dived to a low of Rs 146.42 million.
Since the last fiscal year, shipments started to rise again and reached a five-year high in just seven months.
The Nepal-India trade treaty does not allow third-country goods to be re-exported to India without duty while almost all Nepali goods have been awarded duty-free access to the Indian market.
Exporters here fear that re-exports of betel nuts without value addition could threaten the market access being provided to domestic products.
However, a betel nut trader complained that govenrment invited a situation of confrontation in the name of controlling imports. “It could neither control betel nut imports nor ease exports,” he added.
The scale of betel nut imports is clearly shown by the fact that the Mechi Customs Office earns more than half of its income from the customs duty imposed on betel nuts.
Mechi Customs collects Rs 200-300 million in taxes on betel nut imports annually. “Our customs office may collect the targeted taxes from betel nut imports only if the current scale of shipments continues in the days to come,” said another customs official.
But the massive imports of betel nuts are not directed at Nepali afficionados. More than half of the shipments are re-exported to India legally as certificates of origin confirming that they were produced in Nepal are issued.
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