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Nepal – Export – Import Policy

A)   Exports Transit Procedure

I. Payment arrangements.
 Under the Foreign Exchange (Control) Act and Rules, exports are permitted only against advance payment or documentary credit (L/C) to ensure that the payment for the goods is received in Nepal. Therefore, Nepalese Customs releases export shipments only after verifying the bank certificate of advance payment or L/C copy certified by a commercial bank. The exporter has to declare in form BBN I at the time of export that the export earnings will be repatriated within six months in case of transactions under L/C. If payment is not received within 6 months or such extended time as authorized by NRB, the commercial bank has to inform NRB for inquiry into the matter.

There is no limit on advance payment but the buyer has to remit the foreign exchange through a bank or has to exchange foreign currency with a bank while visiting Nepal. The bank issues a certificate of advance payment in a specified format (Annex 16) to the seller or exporter as nominated by the foreign buyer at the time of exchanging the currency. This certificate has to be produced to the Customs at the time of export. However, foreign nationals can carry out as accompanied or unaccompanied baggage Nepalese products up to a value of US $ 1000 without producing foreign exchange certificate of a bank. 

When using the other payment method, the L/C specifies the terms and conditions for shipment. After the L/C is received from its correspondent bank, the bank sends a copy to the exporter. It is the responsibility of commercial banks to see that L/C terms and conditions are fully met before accepting shipment documents and releasing payments to an exporter. Nepalese exporters prefer the irrevocable L/C, as it is normally withdrawn only when the exporter does not meet the terms and conditions of shipment leading to the rejection of documents for negotiation by the bank. Therefore, this type of L/C ensures safety of payment to the exporter. Currently banks at the both ends normally mention in most L/C documents that the credit is subject to the UCP 500 (1993). 

The commercial banks experience on average 4 shipments out of 1000 that exceed the shipment date specified by the L/C, and most of the documents are subject to discrepancies. Therefore, it has become a normal practice to accept such documents on exporter's risk for negotiation with the correspondent bank. Depending upon the credit status of an exporter, the bank may or may not release payment to the exporter against discrepant documents before confirmation of acceptance of such documents from the correspondent bank. If the payment received from the correspondent bank is not more than USD 500 less than the stipulated L/C amount, the bank can accept the payment with information to NRB. But if the discrepancy in payment is more than USD 500, the bank has to obtain prior permission of NRB to accept the payment. Partial shipment and part payments are allowable only as per the terms of L/C. While releasing payment to the exporter before realizing payments from the correspondent bank, the bank deducts some amount as interest. The interest rate may vary from bank to bank. For instance, one of the commercial banks is charging 12 days interest at 14%. Another commercial bank levies 15 days interest at 12% assuming that the payment will be received within 14-15 days. Most exports are on FOB Kathmandu Airport or Calcutta although a separate payment for freight is allowed subject to the submission of documentary evidence including quotation for freight rates.

II. Certificates for exports.

As the export of specific products like readymade garments takes place regularly in sizable lots requiring timely delivery, uniform quality and tailoring, overseas buyers tend to either permanently station their own staff in Nepal or send experts from India to inspect quality whenever shipments are ready for export. The L/C specifically provides for the production of quality certificate from a nominated agency/person in garment exports. 

Certificate of Origin. There are two private sector associations called Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Nepal Chambers of Commerce (NCC) which issue Certificate of Origin (COO) required by Nepalese Customs on all exports. 

FNCCI- A seven-copy set of COO (Annex 17) is printed and issued at a cost of NPR 5 per set. Then a charge of 12 paisa per NPR 100 (0.12%) of FOB invoice value is levied at the time of putting stamp and signature on COO when it is filled by an exporter. An exporter needs to apply with an invoice and sometimes L/C copy to verify the value of goods by the concerned district chamber of commerce to obtain the COO.

FNCCI does not itself issue COO but arranges its printing in the name of the each district chamber by allocating a separate code number on the COO. FNCCI has delegated its authority of issuing COO to the following district Chamber of Commerce offices, which are its members: 

·                  Nepal Chamber of Commerce, Kantipath, Kathmandu.

·                  Lalitpur Chamber of Commerce and Industry, Lalitpur.

·                  Birgunj Chamber of Commerce and Industry, Parsa.

·                  Bhaktapur Chamber of Commerce and Industry, Bhaktapur.

·                  Morang Merchants' Association, Morang.

·                  Makwanpur Chamber of Commerce and Industry, Makwanpur.

·                  Pokhara Chamber of Commerce and Industry, Kaski.

·                  Siddharthanagar Chamber of Commerce and Industry, Rupandehi

·                  Morang Chamber of Industries, Morang.

·                  Butwal Chamber of Commerce and Industry, Butwal.

·                  Janakpur Chamber of Commerce and Industry, Janakpur.

·                  Narayangarh Chamber of Commerce and Industry, Chitwan.

·                  Nepalgunj Chamber of Commerce and Industry, Bankey.

·                  Kailali Chamber of Commerce and Industry, Dhangarhi.

·                  Gorkha Chamber of Commerce and Industry, Gorkha.

·                  Nawalparasi Chamber of Commerce and Industry, Nawalparasi.

·                  Krishnanagar Chamber of Commerce and Industry. Kapilbastu.

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