BIRATNAGAR, May 1: Prime Minister Dr Baburam Bhattarai on Tuesday promised to put in place a new arrangement, whereby the jute industry would get 4 percent cash incentives with instant effect, in order to support exports of jute products.
Stating that jute products have been one of Nepal´s major exports since decades, PM Bhattarai said jute industry was important for the country as they use local raw materials, generate mass employment and make high value addition in the economy.
“The government is ready to provide all possible support and concessions to the industry,” he stated, adding that the government was mulling over providing 4 percent export subsidy to the jute industry in the budget for 2012/13.
Dr Bhattarai made such a commitment during an interaction with a group of promoters of jute factories. The PM had reached Biratnagar on Tuesday to mark the May Day.
On the occasion, promoters of jute industry handed over a memorandum to the PM, demanding more meaningful support for the industry in the upcoming budget
Entrepreneurs, however, failed to ascertain whether the facility promised by the PM is a new one or he was merely referring to the cash incentive program that have been announced for exports with high value addition since 2010/11, but not smoothly implemented so far. Nonetheless, they informed the PM that the facility he promised was not sufficient.
In the memorandum, the entrepreneurs have demanded that the government provide 10 percent cash incentive to the jute exporters. They have also askedthe government to pledge 70 percent subsidy on electricity bills, provide diesel (for generation of power) at subsidized rate from Nepal Oil Corporation and exempt VAT on diesel consumed by them.
They have also urged the government to form a Jute Board for the systematic development and expansion of jute farming.
Referring to the demand, the PM said he would fulfill two of their demands instantly. “Four percent cash incentive to the industry will come into place immediately. We will also set up Jute Board immediately,” said Dr Bhattarai.
Despite his assurance, Raj Kumar Golchha, president of Nepal Jute Industries´ Association (NJIA) said they would be forced to shut down their industries unless the government provided special incentives to the Nepali manufacturers.
“Prolonged power cuts, labor scarcity and inadequate raw materials have prevented us from utilizing the full production capacity of our factories,” Golchha said, adding, “We will simply fail to compete with the cheaper Indian products if the government did not pledge special support.”
Presently, there are nine large scale jute manufacturing factories in Biratnagar. Together they employ about 20,000 workers and export jute products worth well around Rs 3 billion to India.