Ministry of Commerce And Supplies - Enhanced Integrated ...

N T I S2010Market Access Conditions: Nepal has free access to the Indian market and is benefitting from a high MFN tariffof 30 per cent. Other markets for which there might be a potential for future exports apply the following MFNrates and preferences for Nepal:Table 2.21:Nepal’s Preferential Tariffs for Instant NoodlesImporter MFN tariffPreferential rateapplicable to NepalPakistan 20% 12%Bangladesh 25% no preferenceBhutan 30% 28.5%China 15% no preferenceJapan 20-30% FreeKorea 8% no preferenceEU 27-35% FreeUSA 0-6% FreeQatar andUAE5% no preferenceRussia 15% no preferenceThis shows that Nepal still faces considerable tariff barriers in many of the regional markets (Pakistan,Bangladesh, Bhutan), which probably have a much higher export potential than distant markets. See alsobelow the Market Attractiveness Index (MAI) section for further details on tariffs in the world’s largest marketsfor instant noodles.Major Competitors in World Market: Though there is no detailed data on world trade flows, Thailand appearsto be by far the largest exporter of instant noodles. Other countries with even higher exports (Italy, Turkey)export other types of pasta products. India is not a large exporter (US$2-3 million/year), but Indian producersare the main competitors in the Indian market. India imports very little from other countries.World Market Prospects and Export Prospect: World consumption has been growing by 4 per cent per yearsince 2004, with the highest growth rate being estimated for India with 38 per cent. Consumption in Gulfcountries, to which Nepal also exports, has grown annually by 8 per cent. Industry sources in Nepal also claimthat Bangladesh, Bhutan, and Pakistan have very good prospect for further export growth.Index 3: Domestic Supply ConditionsProducers: There are at least 14 noodles factories of different sizes in the country, but only three of themexport. A few were established under technical collaboration with foreign companies like the Singapore-basedCinnovation Group or the Thai President Foods. One of the companies has an estimated turnover of US$10million/year. One has established its own two manufacturing units in India with an investment of US$7 millionand a combined total production capacity of 20,000 MT/year. They all are private companies.Production Capacity: It is estimated that the size of the instant noodles sector is around US$28 million/year.According to Nepal Rastra Bank (NRB) statistics, the production of the industry was 25,747 MT in the year2004/05, which is estimated to have been increasing at the rate of 15-20 per cent per year.Quality of Product: The products fulfill stringent hygienic standards. All have acquired the applicable Nepalesestandards and most of the units are ISO 9001:2000 certified.NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT53