Apart from collector's millions rupees income from collection and sale, it contributes more than 30 million rupees to the government as the revenue from collection permit of Medicinal and Aromatic Plants (MAPs) every year. It is estimated that MAPs worth USD 18 millions are traded from Nepal mainly to India.

Because of its multi-millions trade transaction and income generating potentiality, this sub-sector has attracted many stakeholders of commercialization and conservation interest.

The government has formulated some policies and regulation to promote conservation and utilization of NTFPs. However, the smooth implementation of rules and regulations are often in question.

The Forest Act, 1993 and Forest Regulation 1995 provide regulatory framework for NTFP trade in Nepal. Almost all products categorized under the NTFP are found in the national forest and are in control of government jurisdiction in one way or the other. The government has put a ban on the collection of Yarsagumba and Panchaule as well as a ban on the export in crude form Jatamansi, Sugandhawal, Sarpagandha, Sugandh Kokila, Jhyau, Lauth, Silajit, and Talis Patra. Under community forestry laws, a forest user group can manage and utilize forest products including NTFPs in accordance with an operational plan. The FUG can issue a collection permit for the products that are prescribed for harvesting.

The general procedures/steps of NTFP trade are as follows:

Certificate of Income Tax Registration: Traders of NTFP have to register their business with the Office of Income Tax and obtain the certificate of tax clearance.

Collection Permit: A Collection Permit either from the DFO (in government-managed forests) or from a FUG (in the case of Community Forests) is required for harvesting NTFPs. An application should state the type of NTFPs, the area, the quantity, and the purpose of collection.

Royalty Payment: According to the Article 8 (3) of Forest Regulation 1995, royalty should be paid before getting the Collection Permit. But Article 11 (3) of the Regulation mentions that the authorized officer shall collect the fee or royalty while issuing the Release Order. If the NTFPs are collected from a FUG, the fee or the royalty should be paid to the FUG that provides the Collection Permit.

Checking and Weighing: After harvesting the products, the respective forest office (DFO/Range Post) or FUG shall check and weigh to tally the amount of NTFPs collected against the licensed amount.

Release Order or Transit Permit: For the sale, transport, and distribution of herbs collected in the district, a Release Order must be obtained from the DFO. The Release Order is valid for fifteen days but can be extended for seven more days at a time.

Local Taxes: With the provision of the new Local Governance Act that came into effect in May 1999, the local development bodies have a right to impose tax on any product including processed and unprocessed NTFPs at any level of transaction and trade. Many District Development Committees and Municipalities have started taxation on trade of NTFP from the districts.

Checking and Endorsement: The traders are required to show both Collection Permits and Release Order at Forest Check-post/Beat located en rout and they shall transport only after having been endorsed by the Check-post/Beat.

Export Recommendation: DFO recommends the concern Customs Office for the granting permission to export the products.

Product Certification and Export Permission for Some NTFPs: Department of Plant Resources (DPR) provides product test and certification services for processed as well as unprocessed NTFPs. To export the processed NTFPs that are prohibited to export in crude, a Product Certification and Export Permission must be obtained from the DPR.  The Department tests the products, seals the containers and grants the export permission.

Export Recommendation for processed NTFPs to India: Only the processing and manufacturing industries can export processed NTFPs to India. For this, the company should apply with Federation of Nepalese Chambers of Commerce and Industry (FNCCI) for an export recommendation letter. The FNCCI forwards the letter to the Department of Industry. The technical committee of Department of Industry makes necessary inquiries and provides an Export Recommendation to the processing company for the products processed by the company in Nepal.

Certificate of Origin: Certificate of Origin must be obtained from the branches of FNCCI or from the Nepal Chamber of Commerce (NCC) to export NTFPs. To export processed NTFPs to India, the Certificate of Origin is provided to the processing companies that have the export recommendation letter for the products from FNCCI.

Certificate of General System of Preference: If exporters want to have the privilege of exemption of import duties aboard, they must obtain a Certificate of General System of Preference from Trade Promotion Center (TPC) and Customs Office of Nepal.

Export Permission and Duty: Export Permission is granted by Customs Office en rout after taking the Export Duties equivalent to 0.5 percent of the Free on Board (FOB) value of processed and unprocessed NTFP.

Import Permission and Duty: The Customs Office of importing country grants Import Permission. Import Duty on Cost, Insurance, and Freight (CIF) value must be paid to the Customs Office. For processed or unprocessed NTFP, the Import Duty can be exempted from Indian Customs Office if the Certificate of Origin is shown. And for the developed country, Certificate of Origin and Certificate of General System of Preference should be shown to exempt the import duties if the country has given such privilege to Nepalese products. When importing the forest products from foreign country, the importers have to submit an application along with the customs declaration form and the authentic evidence from the concerned country.

Government policies in some cases are supportive for the trade of some NTFPs. Almost all NTFP based manufacturing enterprises can entertain income tax holiday for an initial five-year period, which can be extended up to 10 years. To assist the trade and processing of NTFPs, the export companies are given the tax exemption facility for the export value of the products.

However, to boost the NTFP trade, the ban and taxation provisions and trade and export procedures of NTFP have to be reconsidered. Market support systems and a mechanism for the fair distribution of profits among the NTFP stakeholders have to be promoted.
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Mr. Binayee is the Enterprise Development Officer of ANSAB.

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