Indian finance minister Yashwant Sinha did not to have a SAD-special additional duty-in his budget proposal this year, but has introduced another acronym that could still be a sad story for Nepali exports, especially manufactures using high Indian raw material content. He will replace countervailing duty charged on export prices with a flat 16 percent on the Maximum Retail Price (MRP). This could lead to a cost difference as high as Rs 20,000 per ton of Nepal-made toothpaste exported to India. Companies in Nepal that use raw material imported from India would be hit the hardest because the duty-drawback is low and is almost eaten up by transport and other unseen costs of moving goods in and out of Indian border towns. "MRP could have a serious impact on our exports," says Sandip Ghose of Nepal Lever, Nepal's largest exporter of soaps and detergents. The sellers of toothpaste would also be hit hard. Colgate-Palmolive is Nepal's top toothpaste exporter.
(For more on the budget: p 8)