Ministry of Commerce And Supplies - Enhanced Integrated ...

N T I S2010Information from industry sources and data provided by the TEPC suggest that exports of medicinal herbs,which go mainly to India, could be as high as US$10 million per year. Adding an estimated export value ofUS$1 million for exports of essential oils, this study uses US$11 million for the calculation of indicators for thesector. A separate estimate cited in ITC (2007a) suggests that overall exports of non-timber forest products(NTFP), of which herbs are a substantial part in Nepal, could be as high as US$35 million.Types of Exported Products: Medicinal plants are exported in raw form. A smaller part of the harvest isprocessed into essential oils.Current Export Destinations (share of exports): Essential oils are mainly exported to the EU (71 per cent),India (11 per cent), and USA (10 per cent). Medicinal herbs are mainly exported to India, with significantinformal exports. The only other major destination is Hong Kong (63 per cent of official exports).Potential Export Destinations: Large and dynamic importers for essential oils are, for example, Singapore,Switzerland, and India and for medicinal herbs the USA, EU, and Vietnam. However, such analysis based ontrade flows should be interpreted carefully because such products are very heterogeneous.Nepal’s World Market Share: Nepal’s share in the world market is around 0.1 per cent and 0.2 per cent in themarket for medicinal herbs.Trade Balance: Nepal’s imports of medicinal herbs and essential oils are around US$1 million per year.However, these are not necessarily competing products due to the heterogeneity of the sector.Dynamism of Exports: Exports are highly dynamic. Annual growth of exports since 2004 has been 20 percent. 27Export Prospect: According to industry sources, the main barrier to additional export of essential oils is a lackof supplies, whereas there is sufficient demand from international buyers for such products.Index 2: World Market ConditionsTable 2.24Total World Export Value Medicinal Herbs and Essential Oils, 2005-09 (US$1,000)2005 2006 2007 2008 2009Medicinal herbs (1211.90)* 1,075,041 1,144,928 1,418,939 1,552,489 n/aEssential oils (3301) 1,249,545 1,349,055 1,651,439 2,013,500 n/aMarket Access Conditions (Tariffs and NTBs): Tariffs are relatively low for such products in major markets.However, numerous other barriers exist, such as the SPS measures. Requirements are stricter for finalproducts (such as cosmetic products, perfumes, pharmaceuticals) than for the raw materials which Nepalcurrently exports; so, adding further value to raw materials could be challenging in terms of fulfilling standardsin destination markets. Industry sources suggest that there have not been significant problems in fulfillingexports requirements, with one exception being difficulties in obtaining ‘organic product’ certification.Major Competitors in World Market: Indonesia, China, and France are the major exporters of essential oils.World Market Prospect: The world market for both medicinal herbs and essential oils is growing fast, withannual growth rates of 13-18 per cent (2004-08) for major products. Generally, prospect in the world marketsfor such natural products is considered to be very positive. 2827TradeMap, using mirror data. 28 See for example ITC (2007a).NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT57