Cement export plunges significantly in a month amid uncertainty of receiving cash subsidy

KATHMANDU, Dec 28: Export of Nepali cement that has been occupying one of the major portions in the country’s export baskets declined by 92 percent last month, which has been blamed mainly to the government’s delay in releasing cash subsidies on the exported goods.

The records with the Department of Customs (DoC) show that Nepal exported mere 34,833 tons of cements worth Rs 215.61 million to India during mid-November and mid-December this year. This included export of 16,182 tons of cement clinkers.

In the review month of last FY, a total of 430,805 tons of cement including 407,055 tons of clinkers was exported. The value of the construction material was worth Rs 378.42 million.

Tara Prasad Pokhrel, vice-president of Cement Manufacturers’ Association of Nepal, said the cement manufacturers reduced their export quantity to India after the government delayed providing cash subsidies. “Citing an increase in the supply costs, the manufacturers curtailed their exports last month.”

Previously, the government had been providing cash subsidies of 4 to 8 percent when exporting domestic products abroad. However, only companies that exported their goods worth more than Rs 500 million were eligible to get the subsidy amounts. Based on the value addition, the exporters got the cash subsidies in different ratios. The company having more than 70 percent of the value addition was supposed to get an eight percent cash subsidy from the government.

On an average, Nepali cement manufacturers have been using 75 to 80 percent of the local raw materials in their products. The cement exporters had been receiving grant amounts totaling Rs 200-250 million annually.

Nepal started exporting cement to India officially in July 2022. The government has been subsidizing cement exports to enhance competitiveness against Indian companies.

Nepal exported cement and clinkers worth Rs 3.85 billion in FY 2023/24, almost three-fold of the amount that the country earned from the export of cement products in the FY 2022/23. There are over 50 cement factories operating across the country. The total production capacity of the domestic cement manufacturers is reported to be 22 million tons annually.

Meanwhile, the government is set to clear Rs 5.34 billion dues of cash subsidies on exported goods. According to an official of the Ministry of Industry, Commerce and Supplies, the Ministry of Finance has given green signal to clear subsidies dues of over three dozen exported items of the last FY.

Last month, speaking at a program, Finance Minister Rameshwor Khanal also promised to release the cash subsidy amounts that had remained uncertain since the announcement of the budget for the FY 2025/26 by the former government led by KP Oli.