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December, 2002 |
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Cover Story |
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The Survival of Garment Industry Nepal
is to observe the year 2003 as the Export Promotion Year while the
number one export item of the country - readymade garment – is
registering a steady decline. It was in 1984 that
readymade garment business entered Nepal as a spillover from
neighbouring India where the manufacturers were handicapped by US quota
restrictions. Ever since, the readymade garments have been the first or
second highest export item of Nepal in terms of value. But since 2001,
readymade garments have started an equally steep decline as was the rise
during the one and half decade previous to that. Though various factors
are held responsible for this decline, the primary factor, according to
the industry source, is the US law (Trade and Development Act)
implemented since the year 2000 allowing special concession to garments
manufactured in Sub-Saharan Africa and Caribbean basin countries (see
boxes about the two components of these US Laws). Since almost 90% of
the garment exported from Nepal is destined for USA, the US law has
dealt Nepali industry a severe blow, say the exporters. The
Maoist insurgency perpetuated the crisis. The September 11 terrorist
attacks in USA had in fact provided an opportunity for the reversal of
the declining trend. The US orders for garments had started going to
non-Arab, non-Muslim countries, thus improving the chances for Nepal.
But the state of emergency declared in November 2001 rather compounded
the problem and scared the buyers away. As a result the year 2002 saw a
rapid decline in the garment export from Nepal. Though the two months
from mid-July to mid-September 2002 saw a 22% increase in the export
value over the same period of the previous year, the value was less than
Rs. 15 billion as compared to over Rs. 16 billion during the same period
in 2000, thus indicating that there is still a lot to catch up. The
effect of the decline is closing down of garment units. Garment
Association – Nepal Comparative
Details of Readymade Garments Export to USA Value in
US$
Note:
Subject to final verification & adjustment Comparative
Details of Export to Canada
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