India withholds Rs 2b dues it owes to Nepal Prem Khanal KATHMANDU, Feb 15 - India is refusing to release about two billion rupees in Duty Refund Procedures (DRP) dues 'citing Nepal's failure to clear its arms purchase dues'. A high level government official on condition of anonymity revealed that Indian officials dropped hints during the last visit to India by a Nepali delegation that it may not release the DPR refund unless Nepal clears its arms purchase dues. During unofficial conversations, Indian officials also told the delegation that Indian military hardware manufacturers have been pressing the Indian government to arrange earlier settlement of outstanding dues. India has not released any DRP refund since last July. Till July the refunds came every month. India hasn't given any reasons officially. When contacted, Jawed Ashraf, commerce counsellor at the Indian Embassy in Kathmandu said "it is under process" but declined to comment further. Outstanding DRP dues from excise duty slapped by the Indian government on goods exported to Nepal are about Rs 2 billion, according to sources. The Indian side has claimed that Nepal owes Rs 1.7 billion for the supply of weapons and military equipment. But Finance Ministry officials dispute the Indian claim and say the amount owed to India is not more than Rs 500 million. India supplied arms, ammunition and military equipment worth over Rs 7.20 billion to Nepal between 2003 and 2005. As per a bilateral understanding, Nepal pays only 30 percent of value for the military supplies, the remaining 70 percent being in the form of grant. Sources say India is withholding the DRP refund chiefly because it suspects Nepal has purchased arms from China for cash after India, the US and the UK suspended their lethal military aid post February One. China has delivered about Rs 70 million worth of military aid in grant. However, it is not yet established whether Nepal has made any commercial purchase of arms and ammunition from China. In private conversations, Chinese officials have dismissed such purchases. Posted on: 2006-02-14 18:59:08 (Server Time)