NICCI asks Nepal government to facilitate FDI from India 

President of Nepal India Chamber of Commerce and Industry (NICCI) Shreejana Rana presented the areas where the government of Nepal needs to intervene.

NL Today

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Kathmandu: Nepal India Chamber of Commerce and Industry (NICCI) has asked the government to pay needful attention to improving Foreign Direct Investment from India. Speaking at the 26th and 27th Annual General meetings of NICCI on Thursday, Shreejana Rana, who has been reelected as president of NICCI, presented the areas where the government of Nepal needs to intervene. 

The new Foreign Investment and Technology Transfer Act requires multiple approvals for repatriation of dividend and technology transfer fees such as from the Department of Industry and Nepal Rastra Bank. “This should be changed to a one-window approval,” she said. “Obtaining approval for repatriation has become more difficult subsequent to the enactment of the new law.” 

She also said that as Foreign Investment and Technology Transfer Rules have not been issued many aspects relating to investment and approvals are yet to be clarified. She asked the government to issue the Rules soon. 

The NICCI President also drew the attention of the government toward ‘Limitation on Contract Manufacturing’, which she said, will block non-equity modes (NEM) of investment which is one of most preferred routes of foreign investment, particularly in the manufacturing sector. “While countries like India which earlier allowed limited FDI in contract manufacturing have recently opened up the sector for 100 percent FDI, Nepal which allowed it till recently has blocked this mode of investment both for foreign as well as domestic investment,” she said. 

She also called on the government to offer tax holidays for new industries. “Nepal offers a 100 percent income tax holiday for the first three years and 50 percent for the next two years. However, our neighboring countries offer 10 years of income tax holiday and other investment benefits both for FDI and domestic Investment. We need to relook at our incentive package to make it more competitive.” 

The provision to make pre-deposit for appeal in tax cases causes a burden to taxpayers to pursue the legal recourse in tax-related disputes, she said. She appealed to the government to provide an option of providing a bank guarantee covering one-fourth of the disputed amount be introduced to reduce the burden of cash flow to taxpayers without compromising the government’s interest. 

Briefing the status of Nepal-India trade, transit, FDI, and economic cooperation Rana said that despite the pandemic, the Government of Nepal and the Government of India coordinated and ensured continued and uninterrupted movement of goods of Nepal-India bilateral trade and third-country trade of Nepal via India. 

“The movement of daily necessities and medicines were not affected as may have been anticipated in the initial stage. Statistics suggest that the movements of consignments having raw materials and other items were smooth and seamless,” she said. 

NICCI celebrated its 26th and 27th AGM in Kathmandu on Thursday by bringing together the stakeholders of Nepal-India trade, commerce and investment and allowing them to express their concerns. Foreign Minister Dr Narayan Khadka observed the event as the chief guest. Former India ambassador to Nepal and former patron of NICCI Ranjit Rae and former Indian minister of power, railways, commerce and industry Suresh Prabhu also delivered their remarks on the occasion.