Guide to Exporting

Exporting from Nepal

Rules related to exporting from Nepal is also governed by the Ministry of Industry, Commerce and Supplies and Department of Customs, under the Ministry of Finance. Besides some prohibited items, most of the goods produced in Nepal can be exported after completing necessary formalities listed in the Guide to Export section below.

Basic Document Requirement

1)    Business registration certificate (one time submission)
2)    Permanent Account Number (PAN) with VAT registration
3)    EXIM Code
4)    Single Administration Document (SAD)–Pragypan Patra or The Yellow Form
5)    Certificate of Origin (COO) and Generalized System of Preferences (GSP) Form A  wherever applicable. Other additional certificates, is necessary
6)    Packaging list
7)    Commercial Invoice
8)    Payment Certificate—Letter of Credit (L/C) or certificate of advance payment

Prohibited List

  • Articles of Archaeological and Religious importance: national and foreign coins of archeological value; idols of gods and goddesses, palm leaf inscription (Tad Patra), Plant leaf inscription (Bhoj Patra; scroll (Thanka paintings) of historical importance.
  • Industry / Raw Materials: Raw hide (including dry salted); raw wool; all imported raw materials, parts and capital goods.
  • Narcotics: Narcotics Drugs  and Psychotropic Substabce as defined in the Single Convention of Narcotics, 1961)
  • Articles of Industrial Importance: explosives materials and fuse or materials needed there for; materials used in the production of arms and ammunition.
  • Conserved wildlife and Related Articles: wild animals, bile and any part of wild animals, musk; snake skin, lizard skin 
  • Conserved bio-diversity and environmental protection related forest products: marsh orchid (Dactylorhiza hatagirea); okhar (juglans regia); lichen; different types of timbers; unprocessed asphaltum.
  • Other products: imported petroleum and oil products; extracted sand, gravel, and boulders.
     

Guide to Export

To start exporting, you will first need to get registered as either a manufacturing industry or a trading firm. If you are a home-based producer and do not have any employees, you can register your business as a private firm at your local ward office. Then get PAN and VAT number from the local office of Inland Revenue Department. After that, to become an exporter, you will have to obtain an EXIM code. You can try our Export Readiness Checker tool which will guide you. 

Besides completing these formalities, you will have to find a trade partner in the country you want to export to, negotiate the terms of trade—such as price and volume of the goods to be sold, modes of transport, selecting freight forwarders and insurer, determining payment channels, and other formalities related to customs, certification, etc. The following section will provide a step-wise guide to exporting from Nepal.

STEP ONE: Find Trade Partners

First, decide which countries you want to export your items to. Use market analysis tool (click here) to identify promising markets and major export market guide (click here) to find potential sources of information on finding a suitable trade partner for you. Participating in trade fairs will also allow you to connect with international buyers, click here to check out such upcoming events. Getting registered at this Portal will also help you get connected with buyers, find out more.  

 

STEP TWO: Conclude Sales Contract

Once you have found a trade partner, proceed to complete transactions with them. You will most likely negotiate on your product prices, quantity, date of delivery, possible mode of payment and trade terms. Remember, after you conclude the sales contract you will have to issue following documents to the importer - Pro-forma Invoice, and ask your trading partner to issue a Purchase Order for you. Also, note that all the monetary transaction will have to be done through banking channels (more on this in STEP FIVE)

 

Determine Trade Terms (INCOTERMS)

While negotiating the terms of trade with your trading partner, you will most likely have to negotiate the commercial trade terms as well. These international commercial terms (INCOTERMS) are globally recognized trade terms between you and your trading partner that guide the type of agreement for purchase and shipping of goods internationally. Most simply, the INCOTERMS tell you:

  • Costs: Who is responsible for the expenses involved in shipment at a going point in the shipment's journey?

  • Control: Who owns the goods at a given point in the journey?

  • Liability: Who is responsible for paying damage to goods at a given point in a shipment's transit?

Some of the more popular modes of INCOTERMS include:

  • EX Works: Under this term, the price quoted applies only at the point of origin and the seller agrees to place the goods at the disposal of the buyer at a specified place on the date or within the period fixed. All other charges are for the account of the buyer. Usage: ex-factory, ex-mill, or ex-warehouse.

  • Cost, Insurance and Freight (CIF): A shipping term included in the contract of sale, CIF indicates that the seller agrees to take full responsibility for delivering the goods to the port of loading, clear the goods for export, and arrange and pay for transportation and marine insurance over the goods to the named port of discharge, such costs being included in the price of the goods. Nonetheless, the risk of loss of or damage to the goods, as well as any additional costs due to any events occurring after the time the goods have been delivered on board the vessel, is transferred from the seller to the buyer when the goods pass the ship's rail at the port of loading. It is up to the buyer to arrange transportation from the port of discharge. Usage: normally CIF followed by a port of destination, e.g., CIF Guangzhou, CIF Singapore.

  • Free on Board (FoB): A shipping term included in a contract of sale, FOB indicates that the seller fulfills his obligation to deliver when the goods have passed over the ship's rail at the named port of shipment, all costs of inland transportation and loading being included in the price of the goods. The buyer has to bear all costs and risks of loss of or damage to the goods from that point. Usage: FoB Birgunj Dry Port, FoB Tribhuvan International Airport.

  • Free Carrier (FCA): A shipping term included in a contract of sale, FCA designates the seller's responsibility for the cost of loading goods at the named shipping point. May be used for multi-modal transport, container stations, and any mode of transport including air.

Source: http://www.dhl.ie/content/dam/downloads/ie/Express/PDFs/dhl_incoterms_explained.pdf

 

STEP THREE: Obtaining required Certificates

 Certificate of Origin

While exporting products, you will most likely have to produce a Certificate of Origin (CoO) in the destination countries. It is at least the case for obtaining duty concessions while exporting . Your local district chambers of commerce are responsible for issuing a certificate of origin. You should approach your district chamber of commerce with the following documents to acquire a Certificate of Origin:

  1. Pro-forma invoice;
  2. Packing list;
  3. PAN/VAT Certificate;
  4. Company Registration Certificate; and
  5. Letter of Credit (L/C) or Advance Payment Certificate

The Office will charge you around 0.12% of the value of your invoice for issuing the Certificate of Origin. For more information on CoO, click here

 

 GSP Certificate

The Generalised System of Preference provides for preferential duty treatment - in the form of a reduced rate of import duty or duty-free-quota-free form, of imported goods originating in beneficiary countries. The principle was agreed at the United Nations Conference on Trade and Development (UNCTAD) and is a facility granted to developing countries ("beneficiary countries") by certain developed countries ("donor countries"). Nepal, being a least developed country, is provided with GSP facility offered by European Union (includes 28 member countries), the USA, Australia, Canada, Switzerland, Turkey, and Japan, provided Nepal fulfills certain criteria related to rules of origin. You can obtain GSP Certificate through TEPC.Exporters sending their goods to the EU, Norway, Switzerland, and Turkey can avail the GSP facilities by getting registered to the REX system. For detailed information, click here

Additional Certificates, if necessary 

Depending on the type of products you are exporting, different certificates may be required. For example, if you are exporting agricultural products, then you may have to obtain plant quarantine certificate or in the case of handicraft items, you may require a valuation certificate issued by Federation of Handicrafts Association of Nepal. To learn about the rules and regulation for exporting specific items, visit our Rules and Regulations page and to find out about the necessary measures to follow based on specific products, click here

STEP FOUR: Financing your Exports

As an exporter, you need to open a bank account at any one of the Categories 'A' Commercial Banks in Nepal.  

You will most likely receive payments either via Advanced Payment or Letter of Credit. You will need to approach the Foreign Exchange Division of the commercial bank of your choice and inform them about your possible incoming payment. For transfer of income via a letter of credit, you will also need to submit documents prescribed in the conditions of the letter of credit which will most likely include:

  1. Bill of Lading
  2. Certificate of Origin
  3. Commercial Invoice
  4. Pro-forma Invoice and
  5. Packing List

Foreign exchange regulations dictate that you will also need to fill BiBiNi 1 and BiBiNi 2 and submit it to the concerned commercial bank. Banks normally charge less than 0.2 % of the total invoice value as commission fees, and the process can take up to five working days.

STEP FIVE: Appoint a Freight Forwarder

If you are not familiar with shipping procedures, we recommend you appoint a freight forwarder (insert hyperlink here), for your shipments. Freight forwarders are professionals (individuals or companies) who specialize in shipments from your factories till the importers' doorsteps. They are well versed with all export/import related procedures, and for a fee (which can range from NRS 10,000 to NRS 30,000 depending upon nature of your export consignment) will complete your documentation and all shipment related requirements. They have a strong logistics network and will arrange different modes of transportation for shipping your items, they will also handle other official responsibilities like clearing your goods from customs and ports and paying duties at customs. Please visit our freight forwarders' page for contact details  

After you obtain necessary documents required for export, identify and call your freight forwarder. Handover those documents to the freight forwarder for exporting purposes. You can even ask your freight forwarder to collect some of these documents for you (see GSP and COO documents). By this time, you should at least have the following documents with you:

  • Pro-forma invoice
  • Commercial invoice
  • Packing list [should contain Name, address, business and tax registration number of the exporter; Name and address of the importer; Invoice number and date; Country of origin of goods and final destination; Box number and other external markings (for example, texts, numbers, or combination thereof) on the box, the goods packed inside that box and their relevant details (quantity,weight, pieces)]
  • PAN/VAT certificate
  • Firm/company registration certificate
  • Letter of Credit or Advance Payment Certificate
  • Appointment letter of the customs agent

Usually, freight forwarders also take care of the following steps, but exporters can also undertake these tasks themselves. 

 

STEP SIX: Appoint Transporter

You will need to hire transporters to move your consignment from your factory premises to your choice of Customs office. Depending on your choice of port and the nature of your goods, the transport charges can vary from NRS 8,000 (for transporting till Tribhuvan International Airport from Kathmandu) to NRS 25,000 (for transporting to Birgunj) to NRS 50,000 (for transporting to Kakarbhitta). You can also approach a Freight Forwarder to do this job for you.

 

STEP SEVEN: Appoint Customs Agent

Customs Agents help you clear customs when your goods enter customs premises. We suggest you find a permanent Customs Agent to assist you with your customs-related operations. There are plenty of Customs Agent offices near Customs Office premises near your choice of Customs Office. However, a more appropriate choice of action would be to find a Freight Forwarder who will already have a selected choice of Customs Agent not only in Nepal but also in India as well.

 

STEP EIGHT: Clear Customs

You will have to appoint a Customs Agent or a Freight Forwarder for clearing your goods at the Customs. Export charges are not applicable for exporting items from Nepal. Inspecting charges amount to less than NRS 200 and loading and unloading charges will be applied during the process of transshipment inside Customs.