Nepal garment industry feels the heat of Indo-Bangladesh pact

The Nepal garment industry, which enjoys duty-free-entry of its products into the Indian market, foresees tough competition from the Bangladesh industry in the wake of similar facilities being made available to Dhaka by New Delhi.

Kathmandu, Aug 30 : The Nepal garment industry, which enjoys duty-free-entry of its products into the Indian market, foresees tough competition from the Bangladesh industry in the wake of similar facilities being made available to Dhaka by New Delhi.

"Once the deal is sealed, Bangladesh will enjoy facilities almost similar to the one Nepalese products have been enjoying. This might put the Nepali manufacturers, who have a lower competitive edge over the Bangladeshis, in a difficult position in the fast growing Indian market," Kantipuronline quoted Garment Association of Nepal (GAN) President Kiran Saakha, as saying.

The proposed Indo-Bangladesh textile pact allows India an annual import of eight million pieces of readymade garments free of customs duty. The deal has been recently approved by the Bangladesh government.

So far, Bangladesh exports to India have been subject to customs and other duties, which total to about 24 percent.

"The agreement will reduce the advantage that Nepali manufacturers are enjoying," said Saakha.

Domestic manufacturers will have to be more competitive in order to sustain business in the southern market, he said.

Nepalese garment industry is rapidly expanding its market in India.

The fact that Bangladesh is a larger producer, has a competitive edge over Nepal and has in the past siphoned away its major orders from the US and Europe after the quota system was phased out in global apparels trading, makes Nepalese manufacturers wary.

Nepalese entrepreneurs diversified exports to India, after global competition increased and other factors that caused them a substantial beating in the US market.

"In the recent period, we have been receiving more enquiries and good responses from other countries and India," said GAN Vice President Prashant Pokharel.

According to Nepal Rastra Bank, export of readymade garment from Nepal to India has increased two-fold, which was over Rs 1.20 billion in 2005-06.

Surya Nepal, the manufacturer of John Players brand of men's wear, has grown as the largest exporter of readymade garments to India.

Nepalese manufacturers are also delivering products to leading Indian brands such as Pantaloon.

The facility that India is extending to Bangladesh has been worked out under the South Asian Free Trade Agreement (SAFTA).

India has promised to provide special duty concessions on garment to the least development countries of SAARC, said Ratnakar Adhikari, a trade expert.

ANI