India-Nepal Trade: Nepal government imposed 13% VAT on vegetables coming from India, traders stopped importing

Traders in Nepal on Tuesday said they have stopped importing onions, potatoes and other vegetables from India after the government imposed 13 per cent Value Added Tax (VAT) last month.

Opposition lawmakers have criticized the Nepal government’s move, arguing that it will leave low-income households vulnerable to food insecurity and add to the suffering of those already badly hit by skyrocketing inflation.

Imported onions, potatoes and other vegetables and fruits will now attract 13 per cent VAT, according to the Finance Bill introduced in Parliament on May 29. Finance Minister Prakash Sharan Mahat defended the move, saying it was aimed at protecting local farmers and cutting down on imports.

Nepal imports almost all its onions from neighboring India. Last year, it imported 173,829 tonnes of onions from India. Nepal grows potatoes that meet about 60 percent of the local demand, while the rest is also imported from India.