Betel nuts are highly demanded in India for the production of tobacco products like Pan Parag and Gutkha. Due to lower production in the country itself, India imports betel nut from third countries with custom duties on import as high as 113 percent. But the taxations are relaxed when imported from Nepal, where the tax is only 13 percent. So, to avoid higher taxation, the betel nuts are imported to Nepal directly via Indian ports and after acquiring certificate of origin for the same betel nuts and certifying them as Nepali produce, they are imported to India. This has grossly misused the tax relaxation on Nepali products given to some select Nepali produces - as part of the preferential treatment given by Indian to Nepali origin agricultural products.The fact became evident when the estimates of betel nut production made by the Ministry of Agricultural Development (MoAD) and the actual production reported in the export report came to the front. Madan Shrestha, assistant director of Regional Agriculture Directorate, Biratnagar informed that the department surveyed betel nut trees planted in Jhapa, Morang and Ilam districts. This survey even included betel nuts trees planted in the yards of houses. The MoAD report based on this survey, contradicted the betel nuts production reported in the export figures.
As per trade treaty with India, certificate of origin is necessary for the export of any Nepali products to India. Generally, upon receiving the data of betel nut production from farmers, district agriculture development office (DADO) writes to the agriculture ministry. The ministry in turn writes to the Ministry for Supply for issuing the certificate of origin, which is issued by local chamber of commerce and industries in consultation with stakeholder association. Traders are allowed to export betel nuts and other agricultural produces to India at subsidized custom duties only after the certificate is issued. However, unscrupulous traders are easily acquiring the certificate of origin for imported betel nuts and exporting them to India by certifying it as a Nepali produce.
Production of betel nuts in Morang district over the last five years witnessed exponential growth year after year. However, the growth comes without corresponding growth in the plantation of the tree. With the betel nut trees count remaining similar to what they were in the past five years, double increment in its production was seen in the district in the last two fiscal years. MoAD data puts the total national production of betel nut at 2041 metric tons during 2013 and a year later the production increased to 2,854 metric tons.
Krishna Prasad Bhandari, a betel nut farmer, informed that 1300 betel nut trees can be grown in one hectare land. And in average, a betel nuts tree produces an average of 40 kilograms of betel nuts in a year. Due to climatic conditions, a betel nut tree starts bearing fruits only after five years of its plantation. So, even if the trees were planted, they are not supposed to contribute in increasing the betel nut produce volume, as reflected in the betel nut export figures, he claimed.
Kashi Chaudhary, an official at DADO, Morang, said that five years back betel nuts were planted by locals in the eastern development region only as means of decorating their surroundings. He said that commercial farming of the fruit had started only recently in the region.
Mukesh Upadhyay, senior vice president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Morang district said that the requests received for issuing the certificate of origin last year were surprisingly high. The FNCCI provides the certificate of origin to traders as per the recommendation of Nepal Betel Nut Farming Development Organization (NBNFDO).
"Earlier the production of betel nut used to be around 400-500 metric tons. But we're shocked to see that last year production had increased to 2854 metric tons," Upadhyay said. Considering the alarming increase in the data, FNCCI had temporarily halted issuing the certificates to investigate the issue. It, however, started issuing the certificate on the recommendation of a report submitted by an investigation team that compromised of experts from the relevant sectors.
A total of 29000 metric tons of betel nuts, worth Rs 3 billion, have been imported from third countries during the last ten months of the current fiscal year. Of this, betel nuts worth Rs 2.4 billion have been exported to India as a Nepali agricultural produce. Last year, 68,000 metric tons of betel nuts were imported to Nepal.
Around 35, 000 metric tons of betel nuts are consumed in Nepal in a year. However, Nepal's own annual production of betel nuts ranges between 10,000 to 12,000 metric tons.
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