Thursday, May 28, 2009

India to gain from US relief for Nepal's garment sector

India to gain from US relief for Nepal's garment sector

SILIGURI/DHARAN/NEPAL: Nepal’s beleaguered apparel industry is going to get a shot in the arm with a new US Bill that has introduced trade relief for apparel and textiles imported from Nepal. Though officially a Nepal-US trade issue, the development would indirectly benefit a large number of Indians associated with Nepal’s apparel industry.

The recent Bill would provide duty-free status to textiles and apparels imported from 14 Least Developed Countries (LDCs), including Nepal, said Garment Association Nepal (GAN) members. According to P Chetri of GAN, the US is the second-largest market for Nepal exports.

Nepal exports to the US in 2007-08 were around $940 million, constituting 8% of Nepal’s total exports. Garmentscomprise a majority of Nepal’s exports to the US. According to GAN figures, in 2001-02, 90% of Nepal’s total apparel exports was to the US. But due to several reasons, it slipped steeply to touch 62% in 2007. The trend continued even afterwards.

Since January ‘09, Nepal has recorded further slide. In January ‘09, the degrowth over January ‘08 was 73%, followed by a degrowth of 65%, 31% and 58% during February, March and April ‘09, respectively.
“The US Bill will definitely help the labour-intensive industry. Its survival is too important for industrially and financially weak Nepal. Against 450 major garments factories 15 years ago, only 10/15 are alive. We had several rounds of talks with the US department of foreign trade on this,” RB Pokhrel, executive member, Export Council of Nepal, told ET.

Importantly, with an open border between Nepal and India, a large number of Indian workers from border areas too work in Nepali garment factories.

Moreover, “a large number of Nepal garment factories used to be run on finance from across the border. Being land-locked, Nepal utilises sea ports at Kolkata or Mumbai to access the outer world. This makes a good number of Indian traders and handling agents get involved in Nepal’s export operation. A possible increase in Nepal’sgarment export to the US would benefit all of them,” said garment exporters from Nepal.


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