It is reported that the Punatsangchhu hydropower project offers Bhutanese industrialists, especially steel manufacturers a lucrative market. But the project that will consume thousands of tonnes of steel will not favour the local steel producer.
As per report, this is because Pasakha steel is more expensive than that supplied from India and this price difference, even though Pasakha is closer arose from the excise duty.
One Bhutanese iindustrialist said that “Our products are expensive by over 8% as our excise duty isn’t refundable, while Indian manufacturers are refunded the duty.”
They said that industries in Bhutan pay excise duty, while purchasing raw materials from India and when the finished good are sold, they don’t get an exemption of the same. The industries last year had approached the government, seeking exemption of excise duty while purchasing raw material, but were rejected.
Industrialists said that besides power, everything else has to be brought from India, including raw material and, with transportation cost and excise duty to be paid on raw material, their cost of production is higher than the selling price in the market.
A member of manufacturing industries association in Phuentsholing said that “There’s no level playing field for the Bhutanese manufacturers to compete for the supply of steel products due to the excise duty component.”