Nepal, with relatively low labour cost, started exporting garments in the 1980s. It gradually increased the country’s foreign exchange earnings. There are more than 160 Readymade Garments (RMG) industries in Nepal, adding more to the national coffers. It employs 150,000; 65 per cent women.

The industry faces challenges because of global adjustment after 2005 to a new trading arrangement. It faces bottlenecks in the form of several non-tariff barriers, environmental standards, labour standards, etc. In addition, unstable climate, strikes, bureaucratic shackles, inadequate cooperation from Export Promotion Bureau make this sector unable to exploit its export potential beyond 60 per cent. Nepal’s garment export to the US, its key foreign market, is decreasing. So it is urgent to identify and remove the drawbacks.

Firstly, 90 per cent garment factories receive orders on CM (cost of making) basis where a major portion of profit is guaranteed for brokers and commission agents. The manufacturers must try to take orders on freight on boat (FOB) basis. Secondly, most garment factories are producing cheap and low quality items. They must diversify into higher quality products and target special markets. Thirdly, Nepal has structural weakness in terms of raw materials. Eighty-five per cent fabric is imported from China, India, Hong Kong, Taiwan, etc. But since MFA (multi fiber agreement) was phased out and quota system abolished, these countries have emerged as our competitors and stopped selling fabric to us. They may ask for a higher price, so we need to restructure our textiles and RMG industries .

The fourth: manufacturers must try to improve productivity because the lead time (time from date of receiving L/C to shipment) has been shortened in the quota-free global market. We should apply advance techniques in various sections such as “computer aided designing and manufacturing” in the cutting section, implementation of standard minute value (SMV) or general sewing data (GSD) for setting time standard in sewing or stitching section. Fifthly, the banking and monetary policy is unfriendly to the manufacturers. They should be given the facility so that back-to-back PAD/forced loan should not be considered a default loan. Loans of this nature should be converted into interest-free block account and amortised against future export proceeds. Lastly, factory owners seem reluctant to motivate employees. They should announce several incentives for workers on the basis of their performance.

To get rid of these bottlenecks, we need technically-skilled manpower with appropriate academic backgrounds. There is a need to produce more Nepali textile designers to boost the garment sector. There is only one such institute in Nepal as of now. Other institutes are planning to start courses in textile designing. But this is not sufficient. The authorities should come up with a comprehensive plan and strategies for lifting the garment industry out of the morass it is in now.