Despite embracing the economic liberalisation policy, the industrial sector’s dismal performance of a mere two per cent growth in the fiscal year 2005-06, is a cause for serious concern. According to the Central Bureau of Statistics, the garment industry has registered a decline of more than 18 per cent while the manufacturing sector’s contribution to the GDP has slid from 10 to 7 per cent. On the foreign trade front, too, the scenario is far from encouraging. Nepal, unfortunately, has failed to make the most of the Trade Treaty signed with India in 1996 and renewed in 2002. Thanks to the inherent inefficiency, Nepal’s trade deficit with India continues to grow at an alarming rate.

Over a decade of Maoist insurgency, the ever-deteriorating business clime and the weak industrialisation process have taken a heavy toll on the country’s industrial sector that is dominated by around 3,000 manufacturing units. To cap it all, the devaluation of the rupee vis-à-vis the US dollar, the culture of resorting to frequent and unnecessary lock-outs, importing of raw materials and high transportation cost are also to blame for the spiralling price of finished products. In such circumstances, how can Nepali goods compete with Indian and Chinese products flooding the local markets? Unless serious efforts are made to address the above-mentioned problems, the multiplier effects will continue to snowball on the social and political sectors as well. Hence, all unhealthy practices that adversely impact the industrial growth have to be eliminated, rightaway if possible.