Cosmetics or makeup products have a special character. They are items of luxury according to some. But data show that such products have become essential items. For example, the demand for cosmetic and makeup items did not go down even during times of pandemics, when the need for makeup and show-off was reduced drastically as people were forced to stay within their homes.
Nepal's import of makeup material (based on HS heading 33.04) witnessed a significant increase of 15 percent in FY2020/21 as compared to the previous fiscal year. Also, the average annual growth rate in the import of such articles over the last 13 years has been 15 percent.
The rise of the nouveau riches, massive urbanisation, exposure to the outer world, women's rightful access to financial resources, increase in the inflow of remittance, rise in salary and wages and rise in real estate prices in Nepal are some driving factors for the growing demand of cosmetic and makeup products.
India is the major supplier of makeup items to Nepal with a 70 percent share in total import of such items in FY2020/21 followed by China, Thailand and the United States of America.
Import figures of makeup products and the growth trend over the decade indicate the prospect of the makeup items industry in Nepal. However, there is complete reluctance in developing the domestic cosmetic industry in Nepal. The government’s greed for revenues generated by such imports is impeding the steps needed to support self-reliance policy in cosmetic products. According to the Department of Customs, the contribution of these items in the state revenue was about Rs. 1.53 billion in FY2020/21.
Even the international market data show a similar trend as in Nepal. Worldwide import of such products has witnessed 11 percent growth over the last two decades. China has emerged as a major player with a 33.33 percent share in global imports in 2020. USA’s share was 6.55 percent share. Likewise, France also remains a major supplier with a 13.30 percent share in global export in 2020.
According to the Global Cosmetic Market Industry Magazine, BRICS Nations (Brazil, Russia, India, China and South Africa) will dominate global consumption of cosmetics in the future and multinational companies will be the major players in such markets. Likewise, herbal-based cosmetics have entered into the global cosmetic market as a shifting factor with growing health concerns among consumers.
Against this background, one can easily predict that there is a huge potential in the cosmetic industry in Nepal. Growing market in our immediate neighbours, China and India, and lucrative demand for herbal-based natural products in the global cosmetic market opens another avenue for Nepal. Appropriate industrial policies are needed to attract investment of multinational companies and to encourage domestic investors.