Bhutan Birding and Heritage Travels

31 July, 2009 - The Punatsangchhu hydropower project offers Bhutanese industrialists, especially steel manufacturers, a lucrative market. But the project that will consume thousands of tonnes of steel will not favour the local steel producer, according to industrialists.

This is because Pasakha steel is more expensive than that supplied from India. This price difference, even though Pasakha is closer, arose from the excise duty, claim manufacturers.

“Our products are expensive by over 8 percent, as our excise duty isn’t refundable, while Indian manufacturers are refunded the duty,” said one industrialist.

They say that industries in Bhutan pay excise duty, while purchasing raw materials from India, and when the finished good are sold, they don’t get an exemption of the same. The industries last year had approached the government, seeking exemption of excise duty while purchasing raw material, but were rejected.

Industrialists say that, besides power, everything else has to be brought from India, including raw material and, with transportation cost and excise duty to be paid on raw material, their cost of production is higher than the selling price in the market.

“There’s no level playing field for the Bhutanese manufacturers to compete for the supply of steel products due to the excise duty component,” said a member of manufacturing industries association (MIA) in Phuentsholing.

Meanwhile, MIA carried out a study on cost implications and will present the findings entitled “Impact of excise duty component on the manufacturers within the country” to the government.

“When BCCI presents the general business scenario in the country to the government next month, the excise duty component will be on the agenda,” said the MIA general secretary, Letro.

It was already presented to the ministries of economic affairs and finance through the coordination of BCCI. “We hope this will create awareness on the negative impact of the excise duty component on industries within the country, and it depends on the government to do what’s next,” said Letro.