NAIMA welcomes annual budget, says it aims to promote the automobile and mobility sector

KATHMANDU: Nepal Automobile Importers and Manufacturers Association (NAIMA) has welcomed the budget for upcoming fiscal year 2025/26 for its positive provisions and arrangements aimed at the development and promotion of automobile and mobility sector. The government announced a budget of Rs 1,964.11 billion for the forthcoming fiscal year on May 29.

Changes in vehicle tax rates in previous budgets have created uncertainty for businesses and instability in operations. However, by maintaining the existing tax rates and policies for automobiles in the upcoming fiscal year, a sense of policy stability has been fostered among businesspeople, NAIMA said in a press statement.

The decision not to alter the current tax rates on electric vehicles, with an emphasis on green energy promotion, increased domestic electricity consumption and pollution minimisation, is expected to help Nepal meet its international climate commitments and support sustainable development.

The budget also provides for 1% customs duty on equipment for charging machine production and assembling industries, which should help establish domestic production and benefit local investors. In addition, the policy to establish vehicle fitness centres across the country to promote road safety is seen as a positive step, NAIMA said, anticipating that collaboration with the private sector will contribute to service expansion, increased efficiency and sustainable infrastructure nationwide.

"While the budget includes several positive measures, it does not address some key issues. There is a need to restructure the high tax arrangements for internal combustion engine (ICE) vehicles to improve accessibility for the general public, considering these vehicles are fuel-efficient and suited to Nepal's conditions. Furthermore, no policies or incentives have been introduced for promoting hybrid and plug-in hybrid vehicles, and the lack of tax incentives for a competitive production system leaves the 'Make in Nepal' campaign seemingly uncovered," read the statement.

Vehicles are now regarded as a daily necessity and an engine of economic growth. NAIMA expects that in the coming days the government will address these matters with further policy arrangements.