Export incentive to make Nepali garment more competitive

The Nepali domestic apparel manufacturers have demanded the government to provide 10 percent export incentive on total export value through the supplementary budget, which according to them, is a must to bring down their cost of production and to boost exports of Nepali apparels. As Nepali garments are up to 18 percent more expensive in the international market as compared to garments from other countries due to higher cost of production.

Chandi Aryal, president of Garment Association – Nepal (GAN) said that higher cost of production has made their products dearer in the international market. Citing an example of the garment industry Aryal said that Nepal and Bangladesh both started garment exports during the 80s. While

Bangladesh has progressed a lot in garment industry and exports garments worth Rs 28 billion annually, as the government offer 10 percent export incentive to local apparel manufacturers. Nepal is lagging behind, with garments worth only Rs five billion being exported every year.

Garment factories in Nepal basically operate for eight months in a year and the remaining four months is the off-season for them but domestic garment companies pays its employees for the entire year. GAN officials stated that implementation of ‘No Work, No Pay’ provision introduced by the Industrial Enterprise Act is crucial to bring down production cost in Nepali garment industry which in turn will bring down the price of domestic apparels.

Garment manufacturers have also urged government to allocate necessary budget to increase participation of Nepali manufacturers in international sourcing fairs from where they can take orders. As per them, high labour wages, huge transportation cost, power shortage and unwanted strikes are also major aspects that have pushed up production cost of Nepali garments.

According to Garment manufacturers, Nepali garments have high demand in the European Union (EU), United States of America and India.