--By TC Correspondent
Since quota phase out Nepali readymade garment (RMG) industry has observed numerous ups and down along with huge challenges but the government is yet to show serious concern for its revival. During the industry’s heyday, the sector alone used to export RMG products worth more than Rs 12 billion but recent statistics do not show any distinct progress.
According to the garment exporters, the industry is yet to see the light of day. Though there are queries for export orders and production but it’s far below the satisfactory level. “It’s true that the industry is receiving queries from the international market mainly from the European Union but the queries and export orders are yet not satisfactory,” Ashok Kumar Agrawal, general secretary at the Garment Association - Nepal (GAN) said.
Full implementation of Agreement on Textiles and Clothing (ATC) of the World Trade Organisation (WTO) on January 2005 ended 40 years of quota based trade of textiles and garment. The expiry of the quota system has not only resulted in the drastic decline of the Nepali RMG export but has also led to the closure of manufacturing units.
“Though quota phase out has affected our industry but we are still waiting for the government to lobby for the Generalised System of Preference (GSP) in the United States which used to be the top garment importer of our country,” said Agrawal. According to him, though the GSP facility is available in EU, the quantity of order still remains low. “We need the government support and special programmes for the revival of the industry,” he said.
Another major reason for this critical situation of the garment industry is insufficient commitment at the industry and policy making levels for responding to foreseen adjustment problems in trade without quota. “We are committed towards capacity building and policy innovation for responding to the changed scenario through active coordination between private sector and the government”, Agrawal said.
At present garment manufacturers are receiving orders for traditional readymade garments such as traditional stitching, designs and handmade embroidery. In midst of other troubles, the industry is also running sort of sufficient skilled labour force. Though comparative statistics of the Trade and Export Promotion Centre (TEPC) show an increment of around 50 per cent in total garment exports in the past six months’, exporters allude this increase to the spike in dollar exchange rates during the period. Total export of Nepali garment in 2012-13 was worth Rs 1.811 billion, which increased by 50.4 per cent with a total export of Rs 2.72 billion during the first six months of the current fiscal year, states the TEPC statistics.
Present Scenario of Nepali Garment Industry
Exporters looking forward for revising GSP facility to the US
The US GSP programme for Nepal expired on July 31, 2013, which has further hit the declining export of Nepali RMG to its top buyer: United States. However the garment exporters are hopeful that the government will take initiatives to revise the GSP facility. During the first meeting of Trade and Investment Framework Agreement (TIFA) in the US, Nepal had raised the issue of GSP facilitation for garments. Nepali entrepreneurs had also underlined the need to revise GSP during the first joint council meeting of Nepal and US to clear trade hurdles.
Proper cash incentive scheme can create new opportunities
The government has only fixed one per cent cash incentive for readymade garments. Earlier, it used to provide two to three per cent cash incentive. This amendment failed to encourage the overall export sector. Garment exporters, find this incentive scheme unjustified and call for revising it.
The garment industrialist waiting for the inclusion of Nepali Garment in the NTIS revised priority list
Failure to increase the export figures and lack of new markets for products in the NTIS priority list has raised concerns among the exporters about the advantage of being listed in the priority list. According to the exporters the government should have included readymade garments along with woodcraft and stone craft in the NTIS priority products. Garments, carpets, pashmina and handicraft products were defined as special focus area for export promotion. Despite having a large share in the total exportable products of the country and despite being recognized as product with comparative advantage by the Nepal Trade and Competitiveness study, readymade garments still remains out of the NTIS priority products list.
Search for new destination
Nepali readymade garment has plans to explore Australian market as its new export destination. According to GAN, Australia already has been importing large quantity of readymade garments from India, Bangladesh and Srilanka and it can be a good opportunity for the country if the Australian market could be researched. In the past single market concentration has hurt the Nepali readymade garment sector and this fact has necessitated the diversification of market for its products.