What You Need to Know Before Shipping from China to Nepal?

Nepal, official name, Federal Democratic Republic of Nepal, is a landlocked country in South Asia has always served as a natural barrier prompting the country to trade more across its flat border with India, but the latter’s current blockade against Nepal has forced it to explore the trade prospects with China. If they have the opportunity to expand, trade between Nepal and China can also be a way to end the country's excessive reliance on foreign trade with India. Business with China has been booming in recent years. The volume of trade between Nepal-China has increased by more than double between 2015 and 2019. Although India still stands as number one when it comes to trade volume.

Nepal mainly imports oil, gold, iron and steel, clothes, pharmaceutical products, cement, electronic appliances, food, and vehicles. Nepal’s main imports partner is India, others include China. Customs and duties are a major source of domestic revenue. In the International trade it has been considered necessary that samples of goods manufactured in one country are sent to another country for being shown or demonstrated for customer appreciation and familiarisation for soliciting orders for goods to be supplied. Documents required for shipment to Nepal from China include a commercial invoice, a customs declaration form (CDF), clearly marked and labelled packaging, and a certificate of origin.

The registered Firm or Company is eligible to import the goods into Nepal, Tribhuvan International Airport (TIA), Kathmandu is the only gateway for traffic by air in Nepal except for prohibited and quantitatively restricted item. No license is required for imports. For the import from China, the payment is made normally in Chinese currency but for procurement of some industrial raw material and machinery, payment in hard currency can also be made as per notification of Nepal Rastra Bank for the product specified. The firm or company to follow up the procedure of import is required to prepare and present the necessary documents for import into Nepal by Air for custom clearance.

There are obvious benefits to increasing trade with the world’s 2nd largest economy. The talk of Nepal becoming a commercial bridge between its two giant neighbours does the round from time to time. However, to assume such a role in the trade between India and China, Nepal needs better infrastructure. The Chinese have already funded a high-mountain container facility at Tatopani and pledged $190m for a 44.5 sq km cross-border free trade zone at Kerung. On the Tibet side of the border, as part of their five-year-plan for the region launched in 2011, China has tarmacked 5,000 new kilometres of road. In 2011, Chinese officials also announced that they were considering laying train track all the way to the border at Khasa.

Nepalese Customs Administration collects Customs duty, Value Added Tax, Excise and other taxes at the border points. It accounts 44% of the total revenue and 50% of the total tax revenue. Customs duty alone contributes 20 % of the total tax revenue. Customs Administration is in the forefront in terms of internal revenue mobilization. This does not mean that the Customs role needs to be confined to internal revenue mobilization. It is equally important to enhance trade facilitation by adopting international convention, recommendation and best practices without compromising with the national security.

Meanwhile, Nepal imported goods worth Rs127.24 billion from China in the first 10 months of the current fiscal year, up 22.3 percent than in the same period a year ago. Telecommunications equipment, electronic goods, machineries, readymade garments, chemical fertilisers, medical equipment and footwear are among the major imports from China. In contrast, import from China has been growing at the rate of 39 per cent per year. In fact, the import has been rising every year while export hasn’t been able to keep pace with the rising import. Overland links have so far made little difference in the trade volume or balance, as almost all goods arrive by ship.