Manufacturer of electric rickshaws Hulas Motors has said that the government’s decision to exempt imports from value added tax (VAT) has hurt the production of its battery-operated vehicles which have become extremely popular in the Tarai.

The government has waived VAT on imported rickshaws leading to a surge in shipments.

Praphulla Chandra Das, managing director of Hulas Motors, said domestic production had been hurt by the government’s decision.

Until the last fiscal year, the government used to charge 13 percent VAT and 15 percent customs duty on imported electric rickshaws. Domestic manufacturers have to pay the same amount of VAT and customs duty and 5 percent excise duty on imported components.

“The VAT exemption has led to a six-fold jump in the import of electric rickshaw this year from 480 rickshaws last year, according to Biratnagar Customs.

The customs office said that 2,673 rickshaws entered Nepal in the first nine months of the current fiscal year.

Hulas Motors has produced 100 two-seater and 500 four-seater rickshaws so far.

It has now stopped production completely, and the vehicles in its stock remain unsold, said Das.

The government has waived VAT on imported rickshaws leading to a surge in shipments