The Auto Industry In Limbo Amid The Import Ban

It's been more than six months since the government imposed a ban on the import of private vehicles and motorcycles to curb foreign exchange outflows but the relaxation is nowhere in sight. The government's myopic policies have led to the collapse of this industry, according to industry insiders.

Although the share of automobiles in the country's growing trade and balance of payments deficit is very small, its revenue contribution is massive.  According to the data shared by the NADA Automobiles Association of Nepal (NADA), the import of private vehicles such as cars, jeeps and vans is less than 1 percent (Rs 17 billion only) of the country's total imports. However, the contribution from this sector is almost more than double (Rs 39 billion). In a nutshell, the automobile sector of Nepal contributes nearly 25 percent to the country's total tax revenue.Although automobile entrepreneurs in the country were quite hopeful about the ban being lifted before the ongoing festive season, the continuation of the ban landed another heavy blow to the already crisis-hit auto industry. For instance, the average imports of Car/Jeep/Van in 11 months of 2078/79 were 1362 units per month. However, in the month of Ashad, total imports are only 156 units which shows the severe impact of import restriction.NADA has been continuously requesting the government to ease the ban on the import of private vehicles and motorcycles. The governing body of automobile dealers in Nepal has been continuously requesting the government to ease the ban on the import of private vehicles and motorcycles. However, the import ban has been extended time and again citing the depleting foreign exchange reserves.On a brighter note, as per the recent data, several economic indicators including foreign exchange reserves have improved in recent times. The government will review or try to amend the moratorium on October 14 depending on the foreign currency reserve position.