The US government has recently given duty free access to Nepalese garments. Before this the Nepalese garment industry was on the verge of collapsing because after expiry of the multi fiber agreement (MFA) in 2005 Nepalese garment manufacturers were not able to compete against strong exporters. However, the facility provided by the US government to Nepalese garment exporters is seen as a huge opportunity for the industry.
The Multi Fiber Arrangement (MFA) governed the world trade in textiles and garments from 1974 through 2004, imposing quotas on the amount developing countries could export to developed countries. The history of the garment industry in Nepal is just over two decades old. Before that, garments in Nepal meant traditional Nepalese garments that were exported to a limited number of countries in limited quantities.
According to Garment Association of Nepal, Readymade Garments (RMG) manufacturing and exports registered a historical high amounting to NRs 12 billion in the year 2001-2002 generating employment for as many as four hundred thousand people. It further adds that the RMG exports started to decline following the expiry of MFA on January 1, 2005. Currently, the RMG export is around NRs 5 billion per year.
The industry has opened up enormous potentials for foreign and domestic investors to spend in the areas of spinning, weaving, sewing, packaging, and accessories manufacturing. The garment sector has provided employment opportunities to women from the rural areas with low incomes.
The garment industry could be the business opportunity for young entrepreneurs too. Of course, it is not easy to deal with shortage of skilled manpower and power-cuts. There is plenty of potential still. Duty free access to Nepali garments can be the revitalization opportunity for the industry which has not been doing anything significant since 2005.
Labor shortage is the major problem the industry is facing. Most of the workers are Indian nationals from Bihar or UP. Proper training and skill development programs should be prioritized in order to develop workforce in the industry. Rather than risking their lives going to the Gulf as housemaids or other field works, women can develop their skills and be independent. Tailoring and sewing is considered to be the occupation of a so-called marginalized group in Nepali society.