South Asian News Network

Kathmandu, June 3: The Confederation of Nepalese Industries (CNI) has expressed its belief that the budget for the fiscal year 2083/84, recently presented by the government, will lay the foundation to give a new direction to the country’s economy. It said in a press release today that the effective implementation of this budget, which has been brought with a focus on industrial promotion, will not only spur domestic production but also attract foreign investors. CNI stated that the decision to reduce customs duties on 273 items to create a single layer in customs for finished products and raw materials for production-based industries will help make domestic production competitive and accelerate the pace of industrialization. The Confederation believes that the abrogation of excise duty on 360 items will help reduce production costs. Similarly, CNI stated that the proper use of forests and natural resources, green industrialization, prioritizing employment creation and import substitution, and the construction and operation of industrial zones like Motipur and Mayurdhap by the private sector will encourage the private sector. According to the press release, the CNI believes that reviewing electricity demand charges to enhance the competitiveness of production-based industries, providing discounts on electricity tariffs, and allowing industrialists to mortgage structures built on land available in industrial estates, special economic zones, and on lease for banking purposes will encourage industrialization. “The provision for automatic value-added tax refunds, the resolution of disputes by paying an additional 1% on disputed taxes, and the arrangement where interest, fines, etc., are not applied is extremely practical. Many industrialists and investors have been entangled in cases for years. This arrangement will provide them significant relief, help them focus on productive activities, facilitate the return of profits and royalties, and the announcement to make returns easier appears to attract foreign investment and play an important role in creating an investment-friendly environment,” the press release said. Similarly, CNI stated that raising the personal income tax limit to Rs 1 million and reducing the maximum rate by 10 percent is an important step for the economy, and only if the purchasing power of consumers can increase will the industry, trade, and service sectors gain momentum, and the measures made by the budget will help expand demand in the economy. “The decision to dissolve and merge government bodies will bring significant improvement to government efficiency and reduce unnecessary expenditure. It will create a legal provision whereby projects approved by the Investment Board do not need further approval from other agencies. Permits for projects that have electricity purchase agreements but have not started construction will be canceled and a new PPA will be made on a ‘take or pay’ basis. The CNI believes that using alternative development finance funds, offshore bonds, clean energy bonds, diaspora bonds, and climate funds to mobilize private investment in infrastructure aims to attract private investment for the projects. The operation of employment linked production zones as models for the development and expansion of labour-intensive industries including agro-processing, tourism service and light products, investment promotion, economic reforms and smooth service delivery will help boost the economy,” reads the CNI press release. CNI also welcomed the Budget Statement for FY 2026/27, stating that provisions related to ensuring financial access for small and medium entrepreneurs by credit protection with ‘First Loss Recovery,’ providing ‘Business Revival Loans’ to industries and businesses unable to operate at full capacity due to capital shortages to encourage capacity expansion and growth, promoting the production of ‘Green Urea’ by the private sector through purchase guarantee agreements and providing electricity at concessional rates, establishing legal provisions related to the corporate social responsibility of industrial establishments, and establishing the Nepal Enterprise Facility as a platform to integrate startups, small, and medium enterprises into the national enterprise ecosystem are positive matters. The CNI stated that physical and financial incentives for resorts and hotels targeting high-value tourists, as well as health tourism branding, will help strengthen the economy. However, the CNI complained that the budget has overlooked the issue of promoting quality and importing quality goods. Similarly, it suggested that policies should be adopted to ensure that productive industries are not subjected to limits on the required land. For this, it has been suggested to address the matter by stating that when registering an industry, the registering authority should be given the approved project or scheme of the industry, and it should be mentioned that there will be no limit on the land for such projects and that no provisions related to land limits will apply to such land. CNI has stressed on the effective implementation of the budget to promote investment and stimulate the economy to achieve the seven percent economic growth target set in the government’s budget statement. —