June 14: Readymade garments worth Rs 1 billion have been stuck in the country due to the suspension of export activity. Since the outbreak of Covid-19, both air and sea fares have gone up, leaving the readymade garment industry no option than to stockpile goods worth Rs 1 billion.

The goods including half-pants, t-shirts, shirts, trousers produced by the industries even before the lockdown are still in the warehouse. Although there is a demand for readymade garments produced in Nepal from European countries at the moment, businessmen have not been able to export goods even if they wanted to due to the rise in shipping charges due to the pandemic.

Exporters now have to pay up to three times more than usual shipping charges for exporting goods. Earlier, the price of goods exported to Europe and the United States by air was USD 3 per kg, but now it has grown to USD 9. Similarly, the fare is equally expensive via waterway. The Garment Association of Nepal has informed that shipping charge through waterways has increased from USD 1400 per container to USD 2200. 

Readymade garments produced in Nepal are exported to European countries including Germany, France, Hungary, Denmark, Italy, Norway, and even to the USA, Australia, and Canada. The main market for Nepal’s readymade garments is Europe, where about 70 percent of Nepal-made products are consumed.

Even in last year's lockdown, goods worth more than Rs 1.5 billion were stuck in the warehouses. Ashok Agrawal, president of the association, said that the industries have reduced their production capacity to around 30 percent as they could not export their products due to the problems in paying rent. He also informed that the direct impact of the reduction in production is falling on the working class people involved in the industry. At present, 50 percent of the 10,000 workers of 50 industries in Nepal have lost their jobs.

"Exporting goods at high fares increases the cost of goods and we have to sell them at higher prices. When we try to sell at higher prices, foreigners start buying goods from other countries instead of buying our goods," he said.

Compared to Nepal, the freight rates are cheaper for the countries connected to the sea. When Nepali businessmen have to pay for a truck and then a ship to Kolkata, it becomes expensive. Due to this, the cost of Nepali products becomes more expensive compared to other countries.

The demand for readymade garments tends to be seasonal. Therefore, the season of clothes in stock now ends soon and then it has to be held till the next season. That would cost the businessmen millions of additional charge. The textile industry, which is facing problems due to the ban on exports, is currently going through a crisis.

Therefore, the association demanded the government to provide concessional loans to the garment industry, which has been playing a big role in increasing employment and export of Nepal. The industry, which had a turnover of Rs 7 billion in the last fiscal year, is expected to see a sharp decline in the current fiscal year due to the pandemic.

Fifteen years ago, there were about 1,200 readymade garment industries in Nepal. More than 100,000 workers were employed in those garment factries. Currently, only 50 readymade garment industries are in operation.

Entrepreneurs say that the cost of readymade garments produced in Nepal is more expensive than the readymade garments produced in other countries as the raw materials required for the industry have to be imported from abroad.