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Ministry of Commerce And Supplies - Enhanced Integrated ...

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N T I S201010. IRON AND STEEL PRODUCTSStrengths Substantial investment from the private sector Up-to-date technology for producing quality productsthat meet market requirements Long experience in production and exportmanagement Strategic location for trade with India, Bhutan,Bangladesh, and Pakistan Several factories certified by the Indian Institute <strong>of</strong>Standards (ISI) and permitted to use the ISI mark Several factories approved for quality standards byPower Grid Corporation <strong>of</strong> India Cooperation by Hindustan Zinc Ltd in supplying zincto Nepal Ability <strong>of</strong> Nepalese factories to deliver in time and inquantities requested Product costs slightly lower than those <strong>of</strong> Indian originOpportunities Nepal-India Trade Treaty provides duty-free access toIndian market Tariffs are gradually being reduced in the regionalmarkets, particularly Bhutan and Bangladesh Recent speedy development <strong>of</strong> infrastructure inNepal, India, and Bhutan has increased marketprospects Huge unmet demand in India, Bhutan, and otherregional markets Possibility to improve labour productivity andworkers’ attitude if appropriate labour regulatoryprovisions are introducedWeaknesses High dependency on transport provided by Indiancompanies High cost <strong>of</strong> pre-shipment financing Poor labour relations Low labour productivityThreats High cost, unreliable, and inadequate electricitysupply Frequent changes in Indian trade policies andfrequent changes in the provisions <strong>of</strong> Nepal-IndiaTrade and Transit Treaty Competition from Indian suppliers likely to get stiffernow that Bihar State Government has come up with apackage <strong>of</strong> industrial incentives, including 20 per centsubsidies on plant and machinery purchases and taxholidays Political instability leading to insecurity, demand forbribes, labour strikes, civil unrest, etc.Actions Streamline the duty drawback system. Streamline customs clearance procedures, including customs post open 16 hours/day andclosed only on Sundays to match Indian schedule. Open additional customs transit points for land route to Bhutan (currently, only one border postallowed). Allow free transit <strong>of</strong> trucks on selected routes linking Nepal, India, and Bhutan. Provide adequate electricity supply. Give priority access (16 hours/day, 6-day-a-week) toexport-oriented sectors. Streamline and lower the cost <strong>of</strong> pre-shipment financing. The current cost <strong>of</strong> L/Cs is too high. Revisit foreign exchange systems. Forward exchange contracts are too expensive. Review and update Nepal Export Promotion Act and Regulations.NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT281

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