CVD waiver revives GAN's hopes

KATHMANDU: India’s removal of four per cent additional duty on Nepali Readymade Garment has sparked a new hope in the Nepali readymade garment (RMG) industry. Now, Garment Association Nepal (GAN) expects an increase of minimum 25 per cent in Nepali RMG export this fiscal year.

According to GAN president Prashant Kumar Pokharel, the waiver of the four per cent additional charge on garment export to India has given some relief to garment industrialists.

“Earlier, we were bound to pay four per cent countervailing duty (CVD) and there was an additional four per cent charge which made our garments less competitive in the market. Now our products can compete with a price drop of Rs 20 less per product exported to India,” said Pokharel.

During the 1990’s, there was a sharp decline in the export of rice, raw jute, pulse and other agro-based and forest-based products. Nepal, in recent years, does not hold surplus of many of these primary products for export. Carpets, garments and pashmina cover about 60 per cent of the overseas export from Nepal. The performance of carpets and garments went down after 2001.

According to Pokharel, in the past America alone imported 80 per cent of total garment products but now the export scenario has changed as India alone imports 50 per cent of Nepal’s total garment exports while export to America is almost zero. The total export to European countries and America is 50 per cent. “Our export base is growing in the Indian market and there is possibility of more,” he added.

According to recent GAN statistics, RMG worth $889,847 was exported in January. Nepali RMG export to the US was worth $706,964 in the same period last year. Meanwhile, garment export to the US was worth $13.6 million in 2008. Due to the four percent CVD, Nepal’s garment export to India declined by a whopping 83.9 per cent in the first five months of this fiscal year.

Pokharel pointed out that CVD waiver is only a small step. The need for preferential treatment in the domestic market, labour unrest, load-shedding, conflict between labour force and management are yet to be dealth with.