A year after rolling out the Nepal Trade Integration Strategy (NTIS), Nepal’s export of high-value products grew at a snail's pace in the last fiscal year.

According to the statistics from the Trade and Export Promotion Centre, the export of high-value goods increased by 10 percent in the review period.

NTIS 2023, which supersedes NTIS 2016, was implemented from the beginning of last fiscal year. The latest trade strategy is meant to support Nepal's graduation from the least developed country (LDC) status to a developing country by 2026.

As per the statistics, export earnings from the goods identified by NTIS 2023 totalled Rs110.38 billion in the review period.

Nepal’s total export amounted to Rs152.38 billion in the last fiscal year.

The aim of NTIS 2023 is to diversify the export market for which a country-wise strategy was said to be prepared and implemented. But little has been done towards that end.

“It’s true. Few works have been done for the implementation of the latest trade strategy and the result is not as expected,” said an official at the Ministry of Industry, Commerce and Supplies requesting anonymity. There are problems in production, quality entrepreneurship development and global price competitiveness in the implementation of trade strategy.

“We have started consultation with the private sector and stakeholders since the beginning of the current fiscal year regarding the legal, resource and other aspects of effective implementation of a trade strategy in the current fiscal year,” said the official.

The ministry has got a budget of Rs34.5 million for the implementation of NTIS in the current fiscal year. Officials said that budget constraint is one of the problems in the full implementation of the trade strategy.

According to the latest NTIS estimation, around Rs463 billion will be required for its implementation.

The major target of NTIS 2023 is to attain Nepal’s trade-to-GDP ratio of 55 percent by 2026 from 43.81 percent in 2021. Trade is the sum of exports and imports of goods and services measured as a share of the gross domestic product (GDP).

Proper coordination among the ministries and government bodies concerned is crucial for an effective implementation of the trade strategy but in the lack of the coordination there is a problem in budget mobilisation.

“The development of entrepreneurship and its ecosystem from the private sector and increase in the government’s capital expenditure are also required to achieve the objective of NTIS.”

Trade experts have been stressing for long that as Nepal is preparing to graduate from the “least developed” status by 2026, the increase in the export of high-value goods is not satisfactory which is not a good sign for the graduation.

“The performances of former NTIS-listed goods were not good, demonstrating that Nepal failed to develop the products’ value chain. Making plans alone doesn’t work if they are not properly executed,” said Purushottam Ojha, former commerce secretary and trade expert in a recent interview with the Post. “There are problems in increasing and enhancing production, assuring quality and marketing Nepali products.”

A major implication of LDC graduation is the loss of preferential market access available through LDC-specific schemes under the Generalised System of Preferences (GSP) and other arrangements.

After LDC graduation, Nepal may lose a huge European market as it might not get facilities under the Everything But Arms (EBA) initiative. This scheme grants full duty-free and quota-free access to the European Union Single Market for all products (except arms and ammunition).

There are around 184 activities for the implementation of the NTIS and provision requiring monitoring and evaluation. But the monitoring mechanism does not seem to have done its work, a trade expert said. There should be a dedicated review after a certain time gap, which helps focus on problematic issues.

The export of iron and steel products, readymade garment, fabrics, medicinal herbs, cement, footwear, lentils, fruits, honey and textile, yarn and rope has increased in the last fiscal year.

Shipment of iron and steel rose by 60 percent to Rs17.40 billion during the review period, making it top exportable goods from listed products. The export of iron and steel contributed 11.4 percent in total export share.

Export of textile, yarn and rope increased by 30.09 percent to Rs19.22 billion contributing second largest export from Nepal. The export of textile, yarn and rope contributed 12.6 percent to the total export.

Readymade garment export increased by 9.12 percent to Rs8.96 billion in the review period.

The export of fabrics increased by 6.68 percent to Rs2.52 billion while medicinal herbs shipment increased by 19.27 percent to Rs2.25 billion.

Cement shipment jumped by 449.05 percent to Rs1.97 billion during the review period. Footwear exports grew by 22.84 percent to Rs1.32 billion.

Nepal’s lentils export increased by 14.12 percent to Rs568.47 million while fruits export jumped 517 percent to Rs19.02 million. The export of honey rose by 210.83 percent to Rs57.47 million.

The exports of carpet, readymade garment, cardamom, jute and related products, felt products, dog food, pashmina, rosin and resin acid, ginger, handmade paper, silver and gold jewellery, vegetable, tea, coffee and spice fell in the last fiscal year compared to the previous one.

Shipments of carpet from Nepal declined by 8.12 percent to Rs10.57 billion while cardamom export declined by 4.06 percent to Rs7.94 billion.

Exports of jute and processed goods fell by 7.86 percent to Rs7.04 billion.

Shipment of felt products dropped by 8.18 percent to Rs4.79 billion in the review period.

Dog chew export came down by 6.59 percent to Rs3.18 billion in the last fiscal year. Shipment of pashmina also fell 5.32 percent to Rs3.02 billion.

Export of rosin and resin acids declined by 10.51 percent to Rs1.47 billion. Shipment of Nepali paper declined by 10.18 percent to Rs1.02 billion.

Gold and silver jewellery exports declined by 69.14 percent and 22.39 respectively to Rs58.23 million and Rs167.05 million accordingly.

Nepal’s tea, coffee and spice exports shrank by 4.48 percent to Rs13.44 billion.

Shipment of pasta fell by 14.38 percent to Rs1.96 billion during the review period.