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Paint manufacturers urge govt to reduce customs duties on import of raw materials

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Paint manufacturers urge govt to reduce customs duties on import of raw materials

Paint manufacturers urge govt to reduce customs duties on import of raw materials

May 17, 2023

Kathmandu: Paint manufacturers have urged the government to reduce customs duties on the import of raw materials, arguing that excessive duties on imports have hit the domestic industries.

Organizing a press meet in the capital, Nepal Paints Manufacturers’ Association said that Nepal is self-sufficient in paints, however, the policies of the government have failed to encourage domestic industries.

The government, according to the association, is levying up to 30 percent customs duties on raw materials, the same it levies on finished paint products.

“How can domestic industries compete with international brands in such a condition?” questioned Vishwa Prakash Sakha, president of Nepal Paints Manufacturers Association during the press meet.

Currently, there are 50 paint industries in Nepal. The yearly turnover of these companies is recorded at around Rs 20 billion, according to the association.

“Currently, paint industries pay 30 percent customs duties, seven percent excise duties, and 13 percent value added tax (VAT). The duties the industries are paying are excessively high. It should be lowered at the earliest,” he urged the government.

According to Sakha, the Department of Customs has classified emulsion–a major raw material for paint manufacturing–in Harmonised System Code (HS Code) 32.09. “The government has classified the raw material as the finished good. The raw materials rather should be classified as HS 39.06,” he said.

On June 23, 2019, the Department of Customs issued a notice that the raw materials be identified in HS 32.09. “As per the classification, manufacturers here have to pay 30 percent in customs duties. And the industries are deprived of enjoying benefits of South Asian Free Trade Area,” the president added.

“In the neighboring countries like Sri Lanka, India, and Bangladesh, the government levies only 10 percent customs duties on the import of acrylic polymer. Such policies have helped the industries there to have a stronghold in their domestic markets,” according to the association.

“When domestic industries started manufacturing in Nepal some four decades ago, the government categorized paints as luxurious items. The government perception to paint manufacturers is still the same,” said Sakha.

“Paints are not luxuries items and the government needs to understand this,” said Sakha.

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