The virus lockdown has wiped out Nepal's handicraft trade with exports down by 95 percent in the past two months, traders said.

According to the Federation of Handicraft Associations of Nepal, most handicraft traders were readying to ship their products to international markets when the outbreak struck, leading to export orders being cancelled.

Exporters are now saddled with unsold inventory and bank loans. The handicraft sector has suffered losses worth nearly Rs2 billion in lost exports in the past two months, said Dharma Raj Shakya, immediate past president of the federation.

Prachanda Shakya, senior vice-president of the federation, said the lockdown and Covid-19 global pandemic will start showing its impact on the domestic handicraft industry later. He said that the sector would take around three years to recover from the disaster.

The United States and Europe, the major export markets for Nepali handicraft, are in the midst of the Covid-19 crisis, raising fears among Nepali handicraft entrepreneurs about the future of their businesses.

The handicraft sector provides direct and indirect employment to more than 1.1 million people and contributes Rs20 billion to the national economy through exports and domestic sales, said the federation.

The stay-at-home order and the coronavirus wreaking havoc on the export trade has got handicraft entrepreneurs worried about their future.

Speaking for the handicraft traders and artisans, the federation has urged the government to create relief provisions to help the industry rebound.

The federation said the government should launch separate programmes for micro, cottage and small scale industries as Nepal Rastra Bank has announced relief schemes and loan provisions only for medium and large enterprises.

Interest rates should be slashed for the fiscal year 2020-21 and long-term business promotion loans should be issued, it said.

The subsidised loan facility currently being provided to women and agriculture entrepreneurs should be extended to handicraft entrepreneurs, and the loan repayment period should be lengthened to two years.

Banks should provide collateral-free loans of at least Rs2 million at an interest rate of up to 6 percent to small entrepreneurs, traders and artisans in the handicraft sector on the recommendation of the federation.

Interest on loans taken by handicraft entrepreneurs should be waived completely for the period of the lockdown, and the interest payment period for the fiscal year 2020-21 should be extended.

Foreign tourists are unlikely to visit Nepal for another year due to coronavirus fears, so sales of Nepali handicraft products locally and in the international market are likely to be non-existent.

In order to expand the domestic market for Nepali handicrafts, the government should promote the habit of using and giving local products as gifts.

There is a need to establish a policy to promote small handicraft entrepreneurs by organising international trade fairs in Nepal which will help to increase the export trade of Nepali handicraft items. It is also important to create an environment where the private sector can assist the government in this endeavour.

As the coronavirus pandemic could lead to an economic recession, new markets need to be explored. Brazil, Portugal, Czech Republic and South Africa are potential markets for Nepali handicrafts, so a feasibility study needs to be done in collaboration with the Trade and Export Promotion Centre.

Thousands of young people working abroad have become unemployed due to economic contractions caused by Covid-19. Many of these migrant workers may return home as a result, and they will need jobs. Arrangements for skill training and regular supply of raw materials should be made so some of them can be absorbed into the handicraft industry, the federation said.