Nepal lost nearly Rs7 billion in exports of high value products in the last fiscal year as trade restrictions triggered by the pandemic strangled international commerce.

Shipments of listed or high value products in fiscal 2019-20 that ended mid-July plunged 18.65 percent year-on-year to Rs30.11 billion, according to the statistics of the Trade and Export Promotion Centre.

“Orders from buyers in major international markets like India, the US and Europe fell sharply due to global trade and transport restrictions,” said Sharad Bikram Rana, executive director of the centre.

The world is still occupied with controlling the virus outbreak, and Nepal’s trade could suffer further, he said.

Trade analysts say that it may take some time for exports to bounce back as domestic production has also declined.

Rana said they were working to diversify from traditional markets. The government has brought an 'export house' policy targeting micro, small and medium entrepreneurs to promote local products, he said.

Under this policy, the centre will build the capacity of micro, small and medium entrepreneurs, and offer a 5 percent cash incentive to encourage production of exportable goods, he told the Post.

The export house will link micro, small and medium entrepreneurs to the international market by creating a pool of entrepreneurs engaged in producing exportable goods.

“But before the scheme can be implemented, the pandemic needs to subside here and in the potential export destinations,” he said.

Agro-based production is likely to increase with migrant workers returning from abroad, and the government has arranged to provide subsidised loans to small businesses through the monetary policy, said Rana.

Besides medicine and aromatic plants, exports of products listed in the Nepal Trade Integration Strategy like large cardamom, pashmina, tea, ginger, fabric, textile, yarn and rope, carpet and footwear dropped during the last fiscal year.

Large cardamom shipments declined by 6.19 percent to Rs4 billion from Rs4.28 billion.

Nirmal Bhattarai, immediate past president of the Large Cardamom Entrepreneurs Association of Nepal, said that the lockdown occurred during the main export season which lasts from mid-March to mid-April, resulting in a steep fall in shipments.

Bhattarai said that with the easing of the lockdown, exports to India had gradually picked up.

Pashmina shipments decreased by 9.79 percent to Rs2.26 billion from Rs2.51 billion. Dhana Prasad Lamichhane, secretary of the Nepal Pashmina Industries Association, said that lack of new designs, training and marketing, and the high cost of imported raw materials were major challenges.

“Lack of skilled manpower at home forces manufacturers to hire workers from India and Bangladesh which pushes up the cost of production,” he said. "Nepali pashmina cannot compete in the international market as products from other countries have better designs," he said, adding bank interest was also high.

Tea exports saw a 13.14 percent decline to Rs2.78 billion from Rs3.20 billion.

Deepak Khanal, director and spokesperson for the National Tea and Coffee Development Board, said exports dropped mainly due to an increase in domestic consumption of orthodox tea in recent years, inability to meet the latest tea standards set by the international market, and lack of branding.

In the past, buyers had trust in the products, but now they have started accepting verified production as per the latest standards, he said.

Textile, fabrics, yarn and rope shipments saw a steep drop of 25 percent to Rs12 billion in the last fiscal year from Rs16.20 billion in the previous fiscal year.

Shailendra Lal Pradhan, president of the Nepal Textile Industries Association, said the government removed the VAT waiver provided to textiles by the budget statement for fiscal 2018-19, and a cabinet meeting in mid-November decided to provide a 5 percent waiver on bank interest, but this has not been implemented.

Pradhan said that the government's unfavourable policy has discouraged the domestic textile industry.

According to him, only 25-30 percent of the textile factories are running currently, and production has declined as there is no demand from the international market.

Carpet shipments fell by 17.32 percent to Rs6.16 billion in the last fiscal from Rs7.45 billion in the previous fiscal year.

Hari Bahadur Thakuri, senior vice-president of the Nepal Carpet Manufacturers and Exporters Association, said that the cost of production in Nepal is higher by 25-30 percent compared to India and China, due to which Nepali products are being priced out of the international market.

Ginger exports declined by 14.94 percent to Rs435 million.

The export of footwear saw a drop of 16.72 percent to Rs753 million from Rs905 million. Krishna Prasad Phuyal, president of the Footwear Manufacturers of Nepal, said that the Indian government’s decision to enforce policies to promote its own footwear brands led to a drop in imported products.

Leather shipments saw a sharp decline of 66.65 percent to Rs164 million from Rs494 million. The export of medicinal and aromatic plants increased by 5.31 percent to Rs1.51 billion in the last fiscal year from Rs1.43 billion in the previous fiscal.