US relief for Nepal’s garment sector

KATHMANDU: Nepal’s beleaguered apparel industry is going to get a shot in the arm with a new US Bill that has introduced trade relief for apparel and textiles imported from Nepal. Though officially a Nepal-US trade issue, the development would indirectly benefit a large number of Indians associated with Nepal’s apparel industry.

The recent Bill will provide duty-free status to textiles and apparels imported from 14 Least Developed Countries (LDCs), including Nepal, said Garments Association Nepal (GAN) members. The US is the second-largest market for Nepal’s garment exports.

Nepal’s garment exports to the US in 2007-08 were worth around $940 million, constituting eight per cent of Nepal’s total exports. According to GAN statistics, in 2001-02, 90 per cent of Nepal’s total apparel exports was to the US. But due to several reasons, it slipped steeply to 62 per cent in 2007. The downward trend continued even afterwards.

Since this January, Nepal has recorded a further slide. January’s drop was followed by a decline of 65 per cent, 31 per cent and 58 per cent during February, March and April, respectively.

“The US Bill will definitely help this labour-intensive industry. Its survival is important for industrially and financially weak Nepal. Against 450 major garments factories 15 years ago, only 10 to 15 are alive. We had several rounds of talks with the US department of foreign trade about this,” said RB Pokhrel, executive member of Export Council of Nepal.

Incidentally, with the open border between Nepal and India a large number of Indian workers from border areas too work in Nepali garment factories.

Moreover, a large number of Nepal garment factories used to be run with finance from across the border. “Being land-locked, Nepal utilises sea ports at Kolkata and Mumbai to access to the outer world. This makes for a good number of Indian traders’ and handling agents’ involvement in Nepal’s export operations. A possible increase in Nepal’s garment export to the US would benefit all of them,” said GAN members.