‘Pathetic’ exports prompt Nepal to review trade strategy yet againThe Nepal Trade Integration Strategy has failed to materialise the country’s export potential.
The government is reviewing the Nepal Trade Integration Strategy for the third time after it failed to boost exports amid a changing global trade landscape.
Nepal developed and adopted the Nepal Trade Integration Strategy (NTIS) 2010 as an updated version of Nepal Trade and Competitiveness Study 2004 that focused on the development of 12 goods and 7 services to contribute to the poverty reduction goal adopted by the government by making trade inclusive and equitable.
It was again revised in 2016.
The list of products and services identified for special treatment was whittled down to 12 from 19 in 2016.
Lentils, honey, noodles, handmade paper, silver jewellery and iron and steel products were cut. Likewise, health, education, engineering and hydroelectricity in the services list were dumped. Fabrics, textile and yarn, leather and footwear were added to the list.
Items on the list get special privileges for export.
The Ministry of Industry, Commerce and Supplies said it plans to integrate new products with comparative advantage to boost exports in the upcoming NTIS.
“Though the strategy was revised twice, it failed to increase exports. It was due to the lack of coordination between the government bodies,” Manish Lal Pradhan, chairman of Export Promotion Committee of Federation of Nepalese Chambers of Commerce and Industry, told the Post.
Growth in the export of listed products is possible when the government bodies such as Finance and Industry ministries and its agencies like Department of Commerce, Supplies and Consumer Protection coordinate, he said.
Tax exemption on many of the listed goods have also been halted due to the lack of budget and this needs to be addressed, Pradhan said. “It also requires proper policy to boost export of listed goods,” he added.
The government rolled out the Nepal Trade Integration Strategy intending to increase and promote exports to narrow the trade deficit. But even after a decade, exports have been pathetic, experts say.
The NTIS is normally reviewed every five years. The Industry Ministry was expected to review the list last year and identify new potential products, but due to the changes in the government, it did not happen.
Cardamom, tea, ginger, yarns, carpet, pashmina, medicinal herbs, textile, footwear and leather are the products listed in the current Nepal Trade Integration Strategy.
The major market for NTIS listed farm products is India. Europe and the United States are the largest buyers of NTIS listed handicraft goods.
Pradhan said that the new strategy needs to be revamped. “We should make a new strategy for products that have a comparative advantage,” he said. Nepal’s garment export is declining in the international market as the domestic cost of production is high compared to Bangladesh, he said.
The government has talked about branding and marketing exportable goods, but government agencies have not done anything about that, said Pradhan.
Traders said that the Special Economic Zone was supposed to give priority to export-oriented factories, but there are no basic facilities like electricity, sewage and drinking water for them.
The Trade and Export Promotion Centre said the trade deficit has ballooned as a result of poor exports of listed products.
"E-commerce is playing a major role—both in purchase and sale of goods but the country has not been able to formulate a law for e-commerce promotion even after two years of its inception,” Pradhan added.
Chandra Ghimire, former commerce secretary, said that the NTIS needs to focus on listing products that are marketed and also keep in mind that the country will be graduating from the Least Developed Country (LDC) category by 2026. “Our trade deficit is high with India and China. So a country-specific export strategy is required to narrow the trade deficit,” he said.
“We selected the products that are inclusive in nature before. For instance, coffee, tea or handicraft but while observing the performance of listed goods, their growth has not been as expected,” said Ghimire.
As Nepal plans to graduate from the LDC category by December 2026, the country will eventually lose its zero-tariff market access. “It will be important for the marketing and promotion and development of products and services more aggressively to become independent,” Ghimire said. “So, this is the high time to address the bottlenecks of exporting products and services.”
According to the Trade and Export Promotion Centre, export earnings from listed or high-value products barely budged in the first quarter, with shipments during the first three months of the fiscal year—the period mid-July to mid-October— totalling Rs10.30 billion, compared to Rs10 billion in the same period last year.
The value of Nepal's exports in the last fiscal year registered a sharp 27.97 percent year-on-year jump, which traders say was mainly the result of a stronger dollar and higher prices fuelled by a production shortfall in neighbouring India.