India has started allowing fresh Nepali ginger to enter its territory without being subject to goods and service tax (GST), ending around 20 days of confusion over exports of the agricultural product to the southern neighbour.

Ministry of Commerce Undersecretary Tarkaraj Bhatta confirmed that India has expressed commitment to stop levying 5 percent GST on imports of fresh ginger from Nepal, enabling Nepali traders to export the product as per the provisions in the past. A statement issued by the Commerce Ministry on Friday also stated that the problem has been resolved and Nepali farmers and traders can start exporting the product to India without paying any tax.

Earlier, Indian customs officials had started imposing 5 percent GST on Nepali ginger and had asked Nepali traders to get necessary permits from the central government to get a waiver on import duty. This trade barrier caused fresh ginger worth around Rs30 million to rot in Mechi Customs Office. Had the problem prolonged, more fresh ginger worth tens of millions of rupees would have rotted, inflicting huge losses on farmers and traders.

To put an end to this problem, Nepali officials held meetings with the Customs Commissioner at Silguri and other Indian customs officials on Tuesday.

During the meetings, Nepali officials requested the Indian side to allow entry of fresh Nepali ginger without being subject to any kind of tax or permit, as Nepal-India Trade Treaty has ensured free access for Nepali agricultural products to India. 

Nepali traders have long been exporting fresh ginger to India. However, fresh Nepali ginger being exported to India was lumped together in ‘other ginger’ category, which also included ‘dry ginger’ that attracts GST in India.

During the meetings, Nepali side requested that fresh ginger be kept under ‘fresh ginger’ category. The meeting was attended by Bhatta, Narayan Sharma, Nepal’s deputy consul general at Kolkata, Tek Bahadur Aryal, chief of Mechi Customs Office, Narendra Khadka, president of the Ginger Producers and Traders Association, and Mohan Niraula, president of the Customs Agents’ Association. 

“The meeting did produce positive results. But this is a stopgap measure. The ministry will find a permanent solution to this problem soon,” Bhatta said. Mechi Customs Office Chief Aryal said: “If the ministry cannot find a permanent solution, the problem will recur affecting ginger exports in the coming days.”

India is the major market for Nepali ginger. Almost 94 percent of the spice exported to India is fresh and the rest is processed ginger. 

Ginger is grown on more than 23,800 hectares of land across the country. As per the statistics of the Ministry of Agricultural Development, the country produced 242,546 tonnes of ginger in the fiscal year 2015-16, 60 percent of which was exported. Data show Jhapa, Taplegunj, Panchthar and Ilam districts alone produce around 70,000 tonnes of ginger.

Globally, Nepal is the third largest ginger producer after China and India. According to Nepal Ginger Profile 2016, which was produced jointly by the UK Aid-funded Samarth-Nepal Market Development Programme and the Nepal Ginger Producers and Traders Association, the ginger grown in Nepal is high in oil and oleoresin, and can be sold to large industrial buyers in India and other countries if output is increased and quality is ensured.

But Nepali ginger traders have long been facing various trade barriers while exporting the spice to India.