Ministry of Commerce And Supplies - Enhanced Integrated ...

N T I S2010ii.iii.required for the particular exporter industry.Duty Exemption Passbook Scheme (DEPB): This is similar to the process in Nepal, but there is no valueaddition requirement. When the exporter exports finished products, the input import entitlements arecredited in the passbook and to the extent of entitlement, the exporter can import such inputs free ofduty.Duty Free Replenishment Certificate (DFRC): It is value-based (value cap-based). There is no passbook.This certificate is transferable and can be sold like a bond for duty-free imports of varieties of inputs byany industry.Customs procedures: Respondents from the industry considered customs procedures as very cumbersomefor their sector. Clearance procedures of imported cargoes are normally delayed by one day. If an enterprisedeposits duty today customs official clear the cargo the next day. This has implications when the exchangerate fluctuates. Therefore, the clearing and valuation process should be simplified and discretionary powerswith officials restricted. The rule of applicable exchange rate for valuation of import cargo is not fixed. It variesaccording to interpretation and discretion of customs officials from time to time. Prudent commercial practicedemands that the exchange rate prevailing at the time of payment of import duties be applied for valuation ofcargo, whereas often the rate applied is changed during physical crossing of cargo or at the time the final lot ofthe import cargo is crossed from the customs point. This ambiguity in application of rate for valuation leavesmany doors open for manipulation and legitimate businesses are invariably adversely affected.Index 4: Socio-economic ImpactCurrent Employment and Job-Creation Prospect: Ten factories engaged in exporting give full employmentto an estimated 5,000 workers. It is estimated that the total steel subsector gives employment to more than15,000 people in Nepal.Gender Impact: Most employees in the industry are men and there is no particular positive impact on genderequality. The share of women in the industry is estimated to be less than 5 per cent.Impact on Development of Disadvantaged Regions: The industry is mainly located in urban areas within theTerai and has no particular impact on poor areas or disadvantaged regions.Energy and Water Constraints: The industry is highly electricity-intensive. Water is necessary for cooling insome production steps, but water supply is not considered a problem.Environmental Impact: Overall, the environmental impact can be considered low. There is no steel production,which could cause a lot of emissions.Market Attractiveness IndexEuropean markets and the UAE rank very high in the MAI index , mainly because these markets are very largeand have been very dynamic in recent years. There are a few countries where Nepal would enjoy any tariffadvantage over competitors, the main exception being India. However, two caveats of the index have to bementioned: First of all, many markets appear very dynamic, but this is very much related to the increase inthe world market prices for steel in recent years and not necessarily in a similarly large increase in demandfor steel processing. Second, transport costs have to be taken into consideration. The Indian market will likelyremain the main export destination in the near future because of location, the close link that has already beenestablished, and the very dynamic demand in India, in particular through the booming construction industry.Annual construction growth rates for India are forecasted to be around 10 per cent in the next few years, butonly 1-2 per cent for European markets. 6868See factsheet for engineering services.NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT77