Nepali Readymade Garment (RMG) is hunting for new markets. Faced with the plunge in export of Nepali RMG to the US, which used to be the largest buyer, the sector is in search of new markets. According to Prashant Kumar Pokharel, president of Garment Association Nepal (GAN), importers in India for the last five years are trying to import Nepali RMG for the Indian market but lack of reliability has made them opt for import from Bangladesh.

“India has signed an agreement with Bangladesh according to which Bangladesh gets duty-free access for its eight million pieces of garment exported to India. Above the eight-million-piece level, Bangladesh has to pay the regular tariff,” said Pokharel.

Nepal was India’s first choice for importing garments, Pokharel said adding that if only there was a favourable plan and policy and suitable environment the Indian market could have been the major importer of Nepali RMG.

Pokharel said the main cause for the Indian preference is due to quality and competitiveness of Nepali RMG. Fabrics used here are imported from China, Thailand and Indonesia. The materials imported from these countries are cheaper as they have duty-free access.

There are many examples of non-tariff barriers affecting exportable commodities but garment is the only one untouched by the barriers.

It’s been about six months since the special additional duty and countervailing duty charge imposed by India have been removed. Though there are zero tariff rates, the sector is unable to increase the export of Nepali RMG to India. It took years to remove those duties but now the Indian market for Nepali pashmina has shrunk, said Pokharel adding, “Now, we have lost the opportunity and it has been grabbed by Bangladesh.” GAN is facing a steep turndown since the last couple of years as both the global recession and the energy crisis is hitting this sector hard.

Pokhrel said, “Due to the lack of uninterrupted power supply, our production cost has been doubled aside from low productivity while in contrast the retail market in the US is shrinking per day due to lowered purchasing capacity of the buyers in the US. We need duty-free access along with an effective national labour policy.”

According to recent data of GAN, during March the garment export to the US decreased by 31 per cent while total export in the month was worth $682,410.88. The total export of garment to the US during February reduced by 55 per cent while total value of Nepali RMG exported was $915,275 which is a drop of 65 per cent compared to the total export during the same period in 2008. This January, Nepali (RMG) export to the US witnessed a fall of 73 per cent compared to the same period last year. Total RMG export to the US in January was $706,964.17 whereas it was which was Rs 2,650,747.91 during the same period in 2008.

In 2008, Nepali RMG exported to the US was worth $13,609,071.77 that is a decrease of 45 per cent as compared to 2007.