KATHMANDU, May 31: In an effort to reduce illegal imports, the government has abolished the excise duty previously applied to 12 types of dry fruits and related products. Earlier this fiscal year, these items carried excise duties ranging between 5 and 15 percent.
The excise duties had contributed to higher market prices for dry fruits, which in turn encouraged illegal imports. Traders often set prices arbitrarily, leading to unfair competition. For instance, legally imported cashews were priced around Rs 2,000 per kilogram, while illegally imported cashews were sold for Rs 1,500.
To address this, the government removed 23 Harmonized System (HS) codes from the Financial Bill for the upcoming fiscal year 2025/26, including codes for cashews, coconuts, walnuts, pistachios, macadamia nuts, chestnuts, dates, and Brazil nuts. This list covers 12 dry fruit varieties and their raw forms.
Previously, importers paid 10 percent excise on shelled dry fruits and 15 percent on unshelled varieties, but these duties have now been lifted entirely.
The Nepal Retail Trade Association anticipates that this policy change could help lower dry fruit prices to some degree, although market monitoring will remain important. Illegal imports have long flourished due to the previous tax regime, harming legitimate traders who followed legal channels.
Currently, only a few importers supply dry fruits to Nepal, while many retailers sell them. High customs duties on products imported from India and other countries have also encouraged illegal trade, along with price manipulation by traders.
This fiscal year, Nepal imported dry fruits valued at over Rs 2.5 billion, compared to more than Rs 5 billion in previous years. Walnuts, almonds, and cashews continue to dominate imports.
By mid-May of fiscal year 2023/24, imports included 464,705 kg of cashews worth Rs 314.20 million, rising to 547,484 kg worth Rs 476.69 million in the same period of 2024/25.
Walnut imports reached 2,994,071 kg valued at Rs 1.315 billion by mid-May last year, slightly increasing to 3,050,255 kg valued at Rs 1.257 billion in the current fiscal year.
Almond imports rose significantly from 487,444 kg worth Rs 384.31 million to 719,974 kg worth Rs 577.57 million between these periods.
Coconut imports were around 12.7 million kg valued at Rs 422.05 million in mid-May 2023/24, marginally decreasing to 12.44 million kg worth Rs 409.07 million this year.
Pistachio imports surged from 13,151 kg valued at Rs 16.25 million to 298,319 kg worth Rs 33.58 million during the same timeframe.
The government's move to eliminate excise duties is expected to bring more competitive prices and curb the surge in illegal imports affecting the dry fruit market.