Kathmandu, October 9: The Nepal–India Chamber of Commerce and Industry (NICCI) has submitted several suggestions to Finance Minister Rameshwor Khanal, informing him about the potential impacts in Nepal of India’s recent review of the Goods and Services Tax (GST).

The discussion covered the possible effects of India’s GST revision on Nepal’s manufacturing industries, the potential for Indian companies to assist in Nepal’s reconstruction, the suspension of initial public offerings (IPOs) by the Securities Board of Nepal without explanation, and some long-term issues related to foreign investment.

During a courtesy meeting at the Finance Minister’s office in Singha Durbar, led by Acting President, Kunal Kayal, NICCI expressed concern over the recent GST changes in India and urged the minister to take necessary measures to protect Nepal’s domestic industries.

India’s 56th GST Council approved a rate revision effective from September 22. Previously, there were four rate categories, but India has now implemented two, which has redefined the retail pricing of various consumer goods in the country.

The change in India’s GST rates is expected to widen price differences between the two countries, increase the risk of informal trade, and make imported goods more affordable in Nepal. NICCI’s letter to the finance minister stated, “When Indian retail prices are mirrored in Nepal or price gaps persist, retail-level market pressure and a slowdown in trade may occur.”

NICCI also warned that illegal trade could increase, directly impacting Nepal’s government revenue. “Lower retail prices in India and greater liquidity among exporters will encourage the entry of retail packages through open borders,” the letter said. “This will boost unauthorized imports, reduce sales of Nepal-made goods, and create misconceptions about pricing.”

“Even now, Nepali industries are less competitive than Indian ones due to higher production costs and tariffs. When goods enter through ‘grey channels’ without paying customs duties, local producers find it even harder to compete.”

Similarly, a fall in factory prices in India has made formal imports of some products more attractive. However, customs duties, VAT, and excise taxes in Nepal remain unchanged. According to NICCI, this will particularly affect products like shampoos and food items—imports from India will become cheaper for consumers, but local producers will have no room to lower prices.

The letter further stated, “If Nepal follows India’s prices without offering similar tax concessions, domestic industries will become even weaker. Categories such as soaps, toothpaste, shampoos, and food items will be heavily affected.”

NICCI therefore emphasized the urgent need for the government to take immediate steps to protect local production and employment. It also proposed a three-point action plan:

  1. Make raw material imports cheaper — to reduce production costs and deliver price benefits to consumers.
  2. Increase customs duties on finished goods imports — to encourage domestic production.
  3. Regularly monitor and raid border-area shops — to stop untaxed goods entering from India and control retail products without VAT bills.

During the meeting, Finance Minister Khanal said, “The current government’s main responsibility is to conduct fair and independent elections and to assist in reconstruction.

Companies can contribute to the government’s reconstruction fund.”

He also noted that new laws would be needed to address NICCI’s long-term concerns, adding, “I will try to facilitate these matters.”

The NICCI delegation included representatives from Berger Nepal, Unilever Nepal, National Insurance Company Limited, Goldstar Shoes, various hydropower projects, and other industries from both Nepal and India.

People’s News Monitoring Service.