While Ficci has asked the government to put a 70 per cent value addition clause on goods imported from Nepal to safeguard the domestic pharmaceutical, vanaspati, acrylic fibre, copper wire and zinc oxide manufacturers from the current duty-free imports, CII has said the maximum value addition norm should not be more than 30 per cent.
The present Indo-Nepal trade treaty does not stipulate any value addition norm. The treaty, which was scheduled to be reviewed in December ’01, has been extended for a period of three months as governments of the two countries are still deliberating on the issue.
The industry has alleged that the treaty has been used as a route to dump goods of third countries such as China, South Korea and Thailand. Before ’96,any goods imported from Nepal was required to have a minimum 50 per cent value addition in the country. But, while renewing the trade treaty in December ’96, India removed the value addition clause, permitting a duty free imports from Nepal of all manufactured goods. Ficci has also alleged that the import duty differential between the two countries is resulting in significant cost advantage for Nepal in areas such as drugs and pharmaceuticals, edible oils, winding wires and acrylic fibre.