Kathmandu, Jan. 28
Nepali apparel
industry is reeling under labour shortage, high labour turnover and poor export
logistics, concluded a study conducted by the South Asia Watch on Trade,
Economics and Environment (SAWTEE) and Garment Association Nepal (GAN).
More than three-fourth
of the firms in the sector said that they are troubled by high cost of land, labour
shortage and poor logistics, Dr. Paras Kharel, Executive Director of SAWTEE who
led the study on 'Nepal’s garment and textile supply chain: Insights into
constraints and enablers' said at a programme organised in Kathmandu on
Wednesday.
According to him,
labour productivity, skill gap, time to import raw materials and access to
finance have also emerged as the major concerns for entrepreneurs. They are
also facing inadequate water supply for production. 68 per cent of the 25
enterprises participating in the study said so.
Dr. Kharel noted that that unique designs
and craftwork are the major selling point of Nepali apparels. He added that if
critical constraints are addressed, firms expect exports to increase by an
average of 87.4 percent compared to a business-as-usual scenario.
He highlighted the need to increase
investment in skills development, strengthen linkages between garment producers
and the Council for Technical Education and Vocational Training (CTEVT), and
make training programmes more effective.
"We need to explore alternative
markets through more effective utilization of existing trade agreements as well
as through the negotiation of new trade arrangements, economic partnership
agreements, and strengthened economic diplomacy," said Dr. Kharel.
The study was made
public at a dialogue on 'Apparel exports: Competitiveness, critical challenges
and way forward'.
However, the study concluded that Nepal’s
garment sector shows strong growth potential despite structural challenges, and
needs urgent actions to address those critical constraints.
The dialogue presented the key findings of
the diagnostic study which examines the opportunities and challenges facing
Nepal’s garment sector in the context of the country’s impending graduation
from the least developed country (LDC) category and the evolving international
trade landscape.
Speaking at the programe, Rabi Shanker
Sainju, Vice Chair of SAWTEE, pointed out that logistics remains a major
obstacle to competitiveness and emphasised that the absence of an integrated
industrial ecosystem is affecting the country’s supply chain. He also stressed
that Nepal’s diplomatic missions should actively work to create new
international markets.
Referring to the EU-India free trade
agreement (FTA), Sainju noted that trade negotiations are a continuous process
rather than a one-time event and observed that, while FTAs result from lengthy
and structured negotiations, Nepal still lacks even a standard operating
procedure for conducting them.
Pashupati Dev Pandey, President of the GAN,
urged the government to prioritise the garment and apparel sector, emphasising
the need for close coordination among labour, producers and policymakers.
He also cautioned that India’s FTA with the
EU could pose additional challenges for Nepal, particularly in the context of
the country’s impending graduation from LDC status.
Similarly, Prakash Sharma, National Project
Coordinator of the LDC Graduation Project at ILO Nepal, noted that the garment
and textile sector is expected to be among the most affected by LDC graduation,
including in terms of job losses.
He also maintained that the United Nations’
assessment of Nepal’s LDC graduation readiness has revealed significant
apprehension within the private sector. While deferral remains an option, Sharma
stressed that it would require consideration of the perspectives of key
partners such as the EU and the United States.
He also highlighted Nepal’s lack of a clear
strategy to utilize a deferral, if granted.
Rajendra Sangraula, President of the Nepal
Freight Forwarders’ Association, underscored the importance of strengthening
the national flag carrier to reduce airfreight costs, noting that its rates are
significantly lower than those of international airlines.
He further pointed out that the absence of
multimodal transport laws has discouraged shipping companies from operating in
Nepal, effectively forcing freight forwarders to make payments in Indian
currency and often through informal channels.
Likewise, Sharad Bikram Rana, Executive
Director of the Trade and Export Promotion Centre (TEPC), emphasised the need
for a strategic approach and called for the development of a comprehensive
roadmap identifying short, medium, and long-term challenges. He suggested for
clear definition of the roles of key stakeholders, including the government and
the private sector, to address these challenges effectively.
Govinda Prasad Ghimire, Chairman of the
Federation of Export Entrepreneurs Nepal, expressed concern over the capacity
of SMEs and micro enterprises to withstand the impacts of LDC graduation.
According to him, the government must take
a serious approach to protecting these enterprises, particularly those products
identified as priority sectors under the Nepal Trade Integration Strategy
(NTIS).
Dr. Ram Hari Ghimire, Secretary of the
Ministry of Industry, Commerce and Supplies, emphasised that the textile and
garment sector holds high potential, highlighting its resilience and long-term
prospects despite multiple structural challenges. He noted that while the
sector faced a downturn following the phase-out of the Multi-Fibre Arrangement
(MFA), its continued performance demonstrates strong adaptability.
He suggested to
identify products that have high value addition at low cost and have
comparative and competitive advantages at the international markets.
"Apparel is one
of the areas of comparative advantage. We must set high-quality standards and
strictly adhere to environmental and social measures set for garment
industry," said Ghimire.
He also pointed out that the sector’s low
scale of production limits its ability to meet large supply orders and
contributes to higher production costs. He stressed the importance of
identifying and strengthening Nepal’s core competitive advantages, rather than
spreading efforts across multiple sectors.
Published in The Rising Nepal daily on 29 January 2026.
