February 7: Garment, one of the major export items of Nepal, has seen an improvement after Covid-19 pandemic subsided. Garment exports of the country, which lost Rs 2.5 billion due to the cancellation of orders during the peak of the Covid-19 pandemic, have seen improvement in recent times.

From mid-July to mid-January of the current fiscal year (FY) 2079/80, garments worth Rs 4.28 billion were exported from Nepal. According to the Trade and Export Promotion Center, during the corresponding period of the last fiscal year, Nepal exported ready-made garments worth Rs 3.84 billion. The Government of Nepal imposed a lockdown from March 24, 2020 to prevent the spread of the Covid-19 infection, halting the exports of ready-made garments as well according to Pashupatidev Pandey, president of Nepal Ready-Made Garment Industry Association.

He said that even though the export have been encouraging after the end of the Covid-19 pandemic, the increase in bank interest rates, non-availability of subsidized loans, and increase in freight charges caused problems. He says that this sector lost Rs 2.5 billion due to the closure in the first and second waves of Covid-19.

Pandey said, “There were massive losses when orders were canceled and raw materials were stopped in countries like India and China. Only if there was export credit insurance, the businessmen would have received compensation for that.”

Export Credit Insurance is applicable at international level. Such a system is yet to be implemented in Nepal. He said, “If such insurance was arranged through the Ministry of Finance, the compensation for the loss during the Covid-19 would have been available. The loss when the order was canceled would have been covered by the insurance. Cargo freight, which was $1 before Covid-19, has now reached $4.”

The association has urged the government to make arrangements to export goods from Nepal's cargo ships to nearby countries and to keep 500 containers under the state in the border area to export goods from nearby sea ports.

There are now only around 100 industries in the readymade garments sector, which provided high employment in the 1980s. According to the association, more than 10,000 people are directly and indirectly employed in these industries. According to the statistics of the association, when 1200 industries were operating in the 80s, more than 400,000 people got employment in this sector. However, after the removal of customs exemptions and quotas provided by the US since 2005, exports began to decline.

Businessmen say that exports can be increased if necessary policies are adopted by the government after conducting researches on like Bangladesh, Vietnam, and China countries that export large quantities of garments.

Similarly, Pandey says that it is necessary to take initiatives to revive the facilities that were previously provided when the relations with the US were smooth. According to Pandey, it is necessary for the Ministry of Foreign Affairs and the Prime Minister's Office to take a diplomatic initiative to regain the quota facilities given by the US in the 90s. He said, “At that time, when America provided the quota, garments worth US$ 400 million were exported. Now it has reduced to US$ 50 million.”