The Government of Nepal, which has been reportedly "under pressure from India" for a long time to lift the import ban on dairy product, has indicated that it may yield to this pressure.
After the domestic dairy industry excessive stocks of dairy products, the Ministry of Agriculture and Livestock Development in February 2024 decided to suspend imports of dairy products until further notice. As a result, the import of dairy products, including the popular Indian brand Amul, was halted.
However, India has been showing keen interest in this matter during bilateral discussions. For several months, India has been delaying the issuance of Bureau of Indian Standards (BIS) certificates for Nepal's important industrial goods, which has impacted exports. The delay in granting BIS certificates for goods like Goldstar shoes as well as cement, zinc oxide, plywood, and sanitary pads, has affected exports to India.
A senior official from the Ministry of Industry, Commerce and Supplies stated that while the delay in issuing BIS certificates is not directly linked to the ban on dairy product imports, it does indicate a connection. A source affiliated with the Nepal-India Chamber of Commerce and Industry also mentioned that the issue of BIS arose because Nepal halted imports of Indian dairy products.
Amid this pressure from India, preparations are underway to open imports of dairy products. Officials from the Ministry of Agriculture and Livestock Development stated that the decision to open dairy imports was based more on the demands of Nepali stakeholders than on Indian pressure. The ministry confirmed that the ban is being lifted after five-star hotels, airlines, and the biscuit and chocolate industries in Nepal requested permission to import dairy products.
"Some dairy products used by five-star hotels and industries are not produced in Nepal. Therefore, we are preparing to open imports as per their request," the official said. "There is no pressure from India in this matter. Currently, discussions are underway at the ministry regarding the opening of imports solely for dairy products that are not produced here. If all processes are completed, imports will be opened within a few days." Sources indicate that once imports are opened, businessmen will be able to import dairy products under a quota system.
Last July, when Minister for Industry, Commerce, and Supplies Damodar Bhandari attended the BIMSTEC conference in India, Indian Minister for Commerce Piyush Goyal expressed interest in the matter of Nepal's ban on imports of dairy product, according to Baburam Adhikari, a secretary at the ministry. However, he added that the Indian government did not exert formal pressure.
According to dairy entrepreneurs, there are currently about 2,000 metric tons of dairy products worth approximately Rs 1.5 billion in stock in Nepal. Sumit Kedia, director of Sitaram Gokul Milk, stated that opening dairy product imports while domestic production is unsold could be detrimental to Nepali farmers and entrepreneurs.
"We are not saying that five-star hotels, airlines, and the biscuit and chocolate industries do not use dairy products," he said. "Rather, they refuse to buy our products and do not trust Nepali products. Instead of opening imports, the government should create an environment for them to buy Nepali products."
He argued that the government should not bow to Indian pressure while farmers and entrepreneurs suffer due to the lack of sales of domestic products.
Previously, due to unsold dairy products, the government-owned Dairy Development Corporation (DDC) and some private dairies could not pay farmers a debt of Rs 4 billion. The DDC still awes approximately Rs 1.5 billion still to the farmers. Farmers even resorted to protests due to the non-payment of dues. The government provided a loan of Rs 600 million to the DDC before Dashain to facilitate farmers' payments, and the DDC has begun to pay the farmers.
With farmers and entrepreneurs suffering due to unsold domestic products, industry leaders accuse the government of acting against their interests under Indian pressure.
