E-Malt.com News article: 1976

Nepal: The Department of Revenue has finally corrected the wrong done to the beer manufacturers of Nepal. Nearly three years after the imposition of the additional duty of 75% on beer import, and persistent requests by the Nepal government to correct the violation of the free trade agreement, the notification to end the additional duty on beer of Nepal origin was issued on December 17, The Economic Times reported on December 24.

The Nepal Free Trade notification exempts basic duty on all manufactured goods. Beer is specifically included for exemption, but alcoholic beverages as such must pay full duty. Before the imposition of the 75% additional duty, import was charged under the respective state excise system at the stage of clearance from the customs bonded premises since the power to tax alcoholic preparations is in the state list in the Indian Constitution. Nepal beer and Indian beer were subject to same tax rates and could compete on common ground.

Union Breweries and Shaw Wallace have set up beer plants in Nepal based on the duty-free import in India on beer of Nepal origin under the Free Trade Agreement (FTA) between the two countries. Nepal brands like Gorkha and Mount Everest too found a market in India, thanks to FTA. However, the plants shut down or went sick after the 75% additional duty measure, originally designed to hurt European liquor, dried up the flows of beer from the Himalayan kingdom. It took a lot of convincing and appeals to RTR (Royalty-to-Royalty) links between Nepal and India to get the Indian government to correct the wrong. The Indian distilleries too raised the usual cries of “foul” and “unfair competition” to keep Nepal beer out.

The situation changed following the dismantling of the BoP QRs in 2001 and the freeing of liquor from import trade control. Under pressure from the liquor lobby, the Central government slapped a stiff additional duty system “having regard to the state excise duty” to keep imported liquor out of the country. In actual practice, imported liquor is now charged both the new additional duty of customs at the border and, later, the state excise. The common ground between Nepal beer and Indian beer disappeared with the extra 75% duty on Nepal beer compared to the Indian variety.

Libya opens up: On September 13 this year, the United Nations Security Council lifted the decade-old sanctions imposed against Libya following the bombing of Pan Am flight in 1988. Libya has promised to pay $2.7 billion at $10 million to the family of each of the 270 victims. Each family has already received $4 million. The Indian government has yet to repair its trade relations with the Libya on the lines of similar action with Iraq following the removal of UN sanctions. Export and import with Libya is still prohibited. Indian exports to Libya were a paltry $17 million in the last financial year of 2002-2003 while imports were just $3 million. India maintains a full embassy at Tripoli , therefore it is relatively easy to rush to Libya and occupy key positions in the opening market.


26 December, 2003