While most of Nepal’s exportable goods have struggled to gain momentum, kattha has emerged as a notable exception, with demand rising steadily in recent years, particularly in markets such as India, Bangladesh and Pakistan, where paan consumption remains widespread.

Paan, a traditional South Asian preparation from betel leaf wrapped around areca nut, slaked lime and spices, is commonly chewed as a stimulant and mouth freshener. Kattha—also known as catechu—is an essential ingredient in paan, valued for its astringent properties, slightly bitter taste and the deep red colour it produces when mixed with lime.

The substance is derived from the heartwood of the khair tree (Acacia catechu) through a process of extraction, boiling and concentration. Beyond its use in paan, kattha also holds a place in Ayurveda, where it is used to treat oral ailments, skin conditions and digestive disorders.

Nepal has positioned itself as a key supplier of kattha to India. SG Group, one of the country’s major liquefied petroleum gas distributors, is also among the largest exporters of kattha to the Indian market. The company markets its products under the brand “Sugam Nepali Kattha” and exports its entire production, including cutch—a byproduct used in tanneries.

According to the company, Nepali kattha enjoys strong demand in India, particularly for use in pan masala, high-quality cosmetics and medicinal products.

Government data supports the upward trend. According to the Department of Customs, kattha exports increased by 13.53 percent to Rs1.51 billion in the first eight months of the current fiscal year ended mid-March, compared to the same period last year.

Annual export figures show a gradual recovery following pandemic-related disruptions. Exports stood at Rs1.18 billion in the fiscal year 2018-19 before dropping to Rs870.63 million in 2019-20 and Rs845.64 million in 2020-21. The sector rebounded to Rs1.18 billion in 2021-22 and rose further to Rs1.52 billion in 2022-23, reaching Rs2.51 billion in the last fiscal year.

Domestic manufacturers say Nepal has been exporting kattha to India for over four decades, largely through small-scale industries. However, they argue that the sector’s growth potential remains underutilised due to constraints in raw material supply, particularly the availability of khair wood.

“If the government streamlines access to raw materials or promotes commercial plantation of khair trees, export volumes could increase manifold,” said Saurav Agrawal, owner of the Anand Kattha Industries in Biratnagar.

Agrawal noted that despite growing demand, factories often operate only six to seven months a year due to inconsistent supply of raw materials.

Kattha production in Nepal is concentrated in the eastern regions, including Bhojpur, Dhankuta, Ilam and Panchthar. Industry participants say India is unable to meet its domestic demand through local production and relies on imports from countries like Nepal.

Nepali kattha is primarily exported to major Indian markets such as Delhi, Uttar Pradesh and Haryana, where it is used in pan masala, Ayurvedic products and cosmetics manufacturing.

According to the Nepal Kattha Producers Association, demand has surged in recent years due to declining production in India and rising consumption across the region.

“The value of kattha has increased significantly, especially in India and Bangladesh, which has helped boost Nepal’s export earnings,” said Shiva Prasad Ghimire, president of the association.

Ghimire, who has been involved in the kattha business for more than two decades, said Nepal’s exports have historically been limited by small-scale production. “Commercial-scale manufacturing could significantly increase foreign exchange earnings,” he said.

Nepal mainly exports biscuit-shaped kattha packed in cartons containing 20 packets. The byproduct cutch is also exported, primarily to leather industries in countries including India, Bangladesh and Pakistan, where it is used in tanning processes.

Industry data shows that around 10 kattha factories are currently operating in Nepal, generating employment for approximately 2,300 people. Establishing a factory requires an investment of around Rs2 billion, including working capital.

Despite the sector’s growth, producers warn that rising costs and declining availability of khair wood remain key challenges. Without policy support and sustainable resource management, they say, Nepal may struggle to fully capitalise on the growing regional demand for kattha.