The government is revising Nepal’s trade integration strategy for the third time after failing to boost exports in a changing global trade landscape.
Nepal developed and adopted the Nepal Trade Integration Strategy (NTIS) 2010 as an updated version of the 2004 Nepal Trade and Competitiveness Study which focused on the development of 12 goods. and 7 services to contribute to the poverty reduction objective adopted by the government by making trade inclusive and fair.
It was revised again in 2016.
The list of products and services identified for special treatment was reduced to 12 from 19 in 2016.
Lentils, honey, noodles, handmade paper, silver jewelry, and iron and steel products were cut. Likewise, health, education, engineering and hydropower in the list of services have been gutted. Fabrics, textiles and yarns, leather and footwear were added to the list.
Items in the list have special export privileges.
The Ministry of Industry, Trade and Supply said it plans to incorporate new products with comparative advantage to boost exports in the upcoming NTIS.
âAlthough the strategy has been revised twice, it has failed to increase exports. This was due to the lack of coordination between government bodies, âManish Lal Pradhan, chairman of the Export Promotion Committee of the Federation of Nepalese Chambers of Commerce and Industry, told The Post.
Growth in exports of listed products is possible when government agencies such as the Ministries of Finance and Industry and its agencies like the Department of Commerce, Supply and Consumer Protection coordinate with each other, he said. he declares.
The tax exemption on many of the listed products has also been halted due to lack of budget and this needs to be addressed, Pradhan said. âIt also requires an appropriate policy to stimulate the export of the listed products,â he added.
The government has launched Nepal’s trade integration strategy with the intention of increasing and promoting exports in order to reduce the trade deficit. But even after a decade, exports have been dismal, experts say.
The NTIS is normally revised every five years. The Industry Ministry was supposed to review the list last year and identify potential new products, but due to changes in government this did not happen.
Cardamom, tea, ginger, yarns, rugs, pashmina, herbal remedies, textiles, footwear and leather are the products listed in Nepal’s current trade integration strategy.
India is the main market for agricultural products listed in the NTIS. Europe and the United States are the largest buyers of handicrafts listed in the NTIS.
Pradhan said the new strategy needs to be revamped. âWe should develop a new strategy for products that have a comparative advantage,â he said. Nepal’s clothing exports are declining in the international market as the domestic production cost is high compared to Bangladesh, he said.
The government has talked about branding and marketing the exportable products, but government agencies have done nothing about it, Pradhan said.
Traders said the special economic zone was supposed to prioritize export-oriented factories, but there are no basic facilities like electricity, sewage and drinking water for them.
The Trade and Export Promotion Center said the trade deficit had swelled due to weak exports of listed products.
“Electronic commerce plays a major role, both in the buying and selling of goods, but the country has not been able to formulate a law for the promotion of electronic commerce, even after two years of its creation. Pradhan added.
Chandra Ghimire, former secretary of commerce, said NTIS should focus on the list of traded products and keep in mind that the country will graduate 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 needed to reduce the trade deficit, âhe said.
âWe have selected products that are inclusive in nature before. For example, coffee, tea or crafts, but while observing the performance of the products listed, their growth was not as expected, âsaid Ghimire.
While Nepal plans to graduate from the LDC category by December 2026, the country will eventually lose its zero-tariff market access. âIt will be important that the marketing, promotion and development of products and services become more aggressively independent,â said Ghimire. âSo, it is high time to tackle the bottlenecks in the export of products and services. “
According to the Trade and Export Promotion Center, export earnings from listed or high-value products barely budged in the first quarter, with shipments in the first three months of the fiscal year (the mid- July to mid-October) totaling 10 rupees. 30 billion rupees, compared to 10 billion rupees in the same period last year.
The value of Nepalese exports in the last fiscal year saw a sharp rise of 27.97% year-on-year, which traders say is mainly the result of a stronger dollar and higher prices fueled by a deficit. production in neighboring India.