Nepal’s falling garment export biz concerns India

Once known as a major garment exporting hub,

especially to the US, Nepal is witnessing a massive fall in its export industry. The negative dynamics, despite being purely an issue of Nepal, makes good number of Indian stakeholders highly concerned. According to the Garment Association of Nepal (GAN), despite 11 per cent growth during Nepali fiscal year, July 16, 2010 to July 15, 2011 over the previous fiscal, garment export is in overall bad shape.

Even the number of operational factories has dwindled from 450 over a decade ago to hardly 10 now. Nepal’s one of the biggest tax-paying company Surya Nepal, a subsidiary of ITC, India, also had to close down its garments division factory. According to Indo-Nepal cross-border traders, manufacturing process of the garments for outer world or US need higher skill levels thus offering higher remuneration making it attractive for skilled workers from India.

Many entrepreneurs from Indian garment hubs like Delhi, Ahmedabad, Ludhiana or Kolkata have business interests in Nepal’s garment trade. And the open border between the two countries facilitates legal flow of manpower from India to Nepal’s premium class garment manufacturing units. But now falling exports are hitting every trader negatively.

“A US bill, passed during May 2009 providing duty free status to textiles and apparels imported from 14 Least Developed Countries (LDCs) including Nepal also could not arrest the downfall. Now we are looking for new markets to revert the scenario,” said GAN members.