Plywood exports to India from Nepal’s major customs checkpoints have come to a halt after India’s Bureau of Indian Standards (BIS) refused to issue quality certificates.

The disruption has affected major customs checkpoints, including Biratnagar, Kakadbhitta, and Birgunj. Exports from Bhairahawa, Krishnanagar, and Nepalgunj had already been stopped earlier.

Rajendra Prasad Chudal, head of the Mechi Customs Office in Kakadbhitta, said a businessman informed him that 34 trucks carrying plywood, which had passed through the customs checkpoint and reached Indian customs in Panitanki, were unable to obtain the customs clearance in India. Chudal added that he was coordinating with his Indian counterpart and the Nepalese embassy to facilitate the customs clearance of the stopped trucks.

Entrepreneurs have also reported that plywood exports from the Birgunj checkpoint have been disrupted. Four industries from Birgunj, Chitwan, and Mahottari had been exporting plywood via this route, but shipments ceased after February 28, an entrepreneur told New Business Age. India had extended the deadline for meeting BIS standards until February 28, 2025. In response, Nepali plywood industries set up laboratories and other necessary infrastructure to comply with the standards. However, the Indian side has yet to conduct monitoring, according to industry sources.

Hom Prasad Ghimire, central president of the Nepal Plywood Manufacturers Association, stated that 75 plywood industries, which previously exported over Rs 4.5 billion worth of plywood annually, are now facing a crisis due to the halt in exports. He noted that while Nepal was once reliant on Indian plywood, it has recently achieved self-sufficiency in production.

In a notification issued in November 2024, India's Department for Promotion of Industry and Internal Trade (DPIIT) announced that micro, small, and medium plywood industries would not be required to obtain BIS certification until February 28, 2025. However, on February 28, 2025, the department issued another notice extending the exemption period until May 28, 2025, allowing industries more time to meet BIS quality standards. Despite this, Ghimire noted that 45 Nepali plywood industries had already met the specified standards ahead of the deadline. He expressed surprise that exports were halted before Indian technicians conducted inspections and granted approvals.

According to Ghimire, Indian technicians had inspected six plywood industries in Biratnagar and certified two—Century and Green Ply—as meeting BIS standards. However, no further inspections were conducted at other industries. He criticized the decision to stop imports despite industries fulfilling all requirements, including laboratory testing and tax payments to the Indian BIS.

Data from Nepal’s Department of Customs indicates a rise in plywood exports in recent years. In Fiscal Year (FY) 2022/23, Nepal exported plywood and blockboard worth Rs 276.67 million. In FY 2023/24, exports surged to Rs 4.69 billion. Similarly, by mid-March of FY 2024/25, plywood exports to India had reached Rs 4.87 billion.

Ghimire warned that the crisis has intensified, as plywood industries, which employ around 2,500 workers, are struggling due to a lack of raw materials while exports remain blocked. He claimed that Indian plywood manufacturers are attempting to shift Nepal’s focus toward veneer production rather than plywood by raising quality concerns. Veneer, a key raw material in plywood manufacturing, is being targeted for export to Indian companies, which could weaken Nepal’s plywood industry.

Following the decision of the Government of Nepal to provide cash subsidies for plywood exports, industrialists have prioritized exports since last fiscal year. During the tenure of then-Industry, Commerce, and Supplies Minister Dilendra Prasad Badu, the government introduced a subsidy ranging from 4% to 8% on plywood exports. Nepali plywood is primarily made from wood veneers such as Uttis, Chilaune, Kadam, Aap, Asna, and Karma, which are found in the hill areas. The material is widely used in the production of window and door frames, partitions, and furniture.

According to the date from the Department of Customs, Nepal exported veneer worth Rs 2.45 million to both India and China in FY 2022/23. In FY 2023/24, veneer exports to India reached Rs 41.03 million. By mid-March of FY 2024/25, veneer exports to India and China had increased to Rs 293.12 million. While veneer exports have grown, the plywood industry continues to face raw material shortages, posing a challenge for Nepalese manufacturers.