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N T I S2010Export Prospect: According to industry sources, prospect is very good for new designs and niche productssuch as blankets.Index 2: World Market ConditionsTable 2.39Total World Export Value of Pashmina Products, 2005-09 (US$1,000)2005 2006 2007 2008 20091,138,040 1,059,315 1,222,434 1,701,445 n/aNote: Data covers products 6214.10/20/90 and 6301.20Market Access Conditions (Tariffs and NTBs): Tariffs are low in most markets. The EU 71 and Japan apply zerotariffs to Nepal. No preferential access is granted in the US market, which applies a 6.7 per cent tariff. Firmsinterviewed did not report difficulties with other trade barriers.Major Competitors in World Market: The main competitors are China and India.World Market Prospect: There has recently been a strong upward trend in world markets for such products.However, as Pashmina products are ‘fashion products’, demand is very volatile and difficult to forecast.Index 3: Domestic Supply ConditionsProducers: About 86 cottage and small industries, including 25 knitting units, are actively operating 72 andcurrently 327 entrepreneurs are involved in the export of Pashmina products. 73Production Capacity: At present, almost all raw materials, including Pashmina and silk yarns and dyeingmaterials, are imported. The total capacity of the 86 industries is 2 million pieces of shawls and other itemsper year. According to producers, this capacity could easily be increased by 100 per cent within the next fiveyears. The factories in the organized sector have 2,000 looms and employ 5,000 weavers in Kathmandu,Lalitpur, Bhaktapur, Kavre, Makwanpur, and Chitwan districts. In addition, 20,000 households in and aroundKathmandu valley have one loom in each house and family members are capable of weaving shawls. 74Quality of Service: Entrepreneurs have gradually become more quality conscious and are interested inmodernizing weaving and in introducing new knitting technologies. Normally, 70 per cent of pure Pashminayarn and 30 per cent silk yarn are used in shawl production.Availability and Quality of Labour Force: Semi-skilled workers are readily available. Workers are trained onthe-job.Labour supply is not a serious problem should the production be expanded.Labour Cost and Overall Production Cost: Labour cost has increased slightly due to the recent inflationarypressure in the country. According to industry sources, the production cost is high compared to China andIndia.71MFN tariffs in the EU are 8-12 per cent for the relevant products. Data from Eurostat shows that 90-95 per cent of Nepalese exports enter theEU market duty-free under the GSP.72Nepal Pashmina Industries Association (NPIA). There are 160 members with NPIA that include industries, knitters as well as exporters.73Federation of Handicraft Association of Nepal, Handicraft Trade Directory, 2007-08.74International Trade Centre, Chyangra Cashmere and Silk Products from Nepal: Export Performance and Potential, 2007, p. 23.NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT81
N T I S2010Level of Processing Technology: Shawls are woven on handlooms or power looms using a blend of silk andPashmina yarns. Looms range from very small hand-held frames to large free-standing handlooms or powerlooms.Cost and Quality of Infrastructure: The overall cost of infrastructure is low. However, high costs of electricityand transport are reported to be a particular burden for producers.Efficiency of Domestic Supporting Industries: About 400 MT of Pashmina and 200 MT of silk yarn are requiredannually and imported from China and Mongolia. However, there are only two modern yarn dyeing plants.Further dyeing facilities would be needed by small weavers and knitters who do not have their own dyeingfacilities. Many small operators are selling grey Pashmina shawls to exporters for further dyeing, processing,and finishing depending on the buyers’ specific requirements.Domestic Demand: The domestic market for Pashmina shawls is about 10-20 per cent of the totalproduction.Business Environment: The quality of communication and air freight services are considered to be verygood.Government Initiatives and Donor Involvement: Pashmina is one of the priority export products identified inthe Government’s recent Commercial Policy 2009. The Government has already supported Nepal PashminaIndustries Association to arrange registration of ‘Chyangra Pashmina’ with a graphic trademark in majormarkets. 75 Other government policy initiatives include Pashmina goat farm development in potential districtsto establish a long-term source of raw materials, setting up of Pashmina yarn and product testing laboratoryfacilities, human resource development for production and marketing activities and design development. Inthe past, Asia Invest supported NPIA in organizing buyer-seller meetings, training and strengthening of theorganizational capacity.Prospect for Domestic Supply Conditions: Chyangra can survive at altitudes above 2,500 m. More than 35per cent of the country’s total land surface is mountainous and about 50 per cent of this surface is covered bysnow. This condition offers unique prospect for developing and commercializing Chyangra products in Nepal.About 12 per cent of land surface of the country is already covered by grass suitable for pasture. Moreover,further pastureland development in mountain areas is possible. 76 The main districts where Chyangra goatsare being raised are Mustang, Manang, Humla, Jumla, Mugu, and Dolpa. There is long-run prospect fordeveloping Pashmina as well as silk production within the country to assure a permanent source of qualityraw materials for export growth.Index 4: Socio-economic ImpactCurrent Employment and Job-Creation Prospect: It is estimated that currently 5,000 people are gettingfull employment from the Pashmina business in Nepal. According to producers, if a favourable businessenvironment prevails, Chyangra farming is started and external market demand is revived, the presentproduction can easily be doubled without much investment and efforts and, thereby, additional employmentcan be created for up to 5,000 people.75According to Nepal Pashmina Industries Association (NPIA), as of October 2009, applications for registration of collective trademark “ChyangraPashmina” has been already approved by the USA, Japan, Australia, and Norway. Applications submitted to Canada, Brazil, Mexico, EU,Switzerland, Russian Federation, and New Zealand are under serious consideration. Among the Asian countries applications are submitted toThailand, China (including Hong Kong and Taiwan), Israel, Singapore, Japan, UAE, and Pakistan.76Ministry of Agriculture and Cooperatives, Statistical Information on Nepalese Agriculture 2004/05, Dec. 2005.82NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT
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Nepal Trade Integration Strategy 20
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Table of ContentsForewordAbbreviati
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Table 2.17 Acreage and Production o
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List of BoxesBox 2.1 A Nepalese IT
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LoD Limit of DetectionM&E Monitorin
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Chapter 1Trading Environment, Expor
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N T I S20101.3 Capacity Development
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N T I S2010Table 1.1Balance of Paym
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N T I S2010Changes in the Nepalese
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N T I S20101.5 Expanding an ‘Incl
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N T I S2010 Index 4 measures the po
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N T I S2010Table 1.9Impact of 19 Ex
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N T I S2010Table 1.10Geographical D
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N T I S20101.7 Declining Importance
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N T I S2010negotiate for the inclus
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N T I S2010Types of Exported Produc
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N T I S2010Table 2.2Large Cardamom:
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N T I S2010Index 4: Socio-economic
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N T I S2010Index 1: Export Performa
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Page 51 and 52: N T I S2010The opportunities for pr
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Page 60 and 61: N T I S2010Export Prospect: Accordi
Page 62 and 63: N T I S2010Cost and Quality of Infr
Page 64 and 65: N T I S2010Attractive markets for T
Page 66 and 67: N T I S2010Market Access Conditions
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Page 70 and 71: N T I S2010Information from industr
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Page 76 and 77: N T I S2010# Botanical Name 41 Spec
Page 78 and 79: N T I S2010Current Export Destinati
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Page 82 and 83: N T I S20109) Silver JewelryBackgro
Page 84 and 85: N T I S2010Availability and Quality
Page 86 and 87: N T I S2010Attractive Markets for S
Page 88 and 89: N T I S2010Production Capacity: Nep
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Page 92 and 93: N T I S201012345678910# Name of Ste
Page 96 and 97: N T I S2010Gender Impact: Female wo
Page 98 and 99: N T I S2010The value added of those
Page 100 and 101: N T I S2010sheep population, which
Page 102 and 103: N T I S201013) TourismBackgroundTou
Page 104 and 105: N T I S2010Index 2: World Market Co
Page 106 and 107: N T I S2010There are also about 24
Page 108 and 109: N T I S2010Index 1: Export Performa
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Page 112 and 113: N T I S2010Contribution to Skill De
Page 114 and 115: N T I S2010Types of Exported Servic
Page 118 and 119: N T I S201016) Health ServicesBackg
Page 120 and 121: N T I S2010medical services are bei
Page 122 and 123: N T I S201017) Education ServicesBa
Page 124 and 125: N T I S2010should be interpreted ca
Page 126 and 127: N T I S2010foreign students. The me
Page 128 and 129: N T I S2010Under mode 4 (presence o
Page 130 and 131: N T I S2010Index 4: Socio-economic
Page 132 and 133: N T I S2010generate revenue of US$3
Page 134 and 135: N T I S2010monopsony power. Several
Page 136 and 137: N T I S2010The possibility of direc
Page 138 and 139: N T I S2010Dairy Products, specific
Page 140 and 141: Chapter 3Access to the Indian Marke
Page 142 and 143: N T I S2010The Nepal-India Trade Tr
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N T I S2010Most issues reported abo
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N T I S2010Nepalese Domestic Issues
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N T I S2010India’s view is that t
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Chapter 4Access to the Chinese Mark
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N T I S2010products must be wholly
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N T I S2010The findings discussed h
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N T I S20104.5 Other Impediments to
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N T I S20104.7 Recommendations: Cha
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N T I S2010inflow between 2000 and
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N T I S2010Industrial Parks and SEZ
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N T I S2010Lack of up-to-date polic
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N T I S2010Apart from the critical
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N T I S2010capabilities in all five
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N T I S20105.5. Combining Investmen
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Chapter 6Trade FacilitationN T I S2
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N T I S2010In the 2005 Trade Facili
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N T I S2010The latest phase of impl
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N T I S2010improve efficiency. Few
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N T I S2010Figure 7.1Future Organog
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N T I S2010EU countries, special pr
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N T I S2010Act 1980. So far, 130 fi
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N T I S2010The current projects inc
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N T I S2010The NBSM as a secretaria
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N T I S2010Many more organizations
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N T I S2010Table 7.8Existing Nepal
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Table 7.9Standards Issues for Ten E
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N T I S20107.14 Priority Actions an
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N T I S2010It is not clear what amo
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N T I S2010GeneralNepal’s general
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N T I S2010a crucial part of the PR
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N T I S2010residue limits (MRLs) ar
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N T I S2010The viral diseases chirk
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N T I S2010SPS issues Affecting Tra
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N T I S2010Indian phytosanitary sta
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N T I S20108.5 Conclusions and Reco
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N T I S2010Simpler requirements suc
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Table 8.4Summary of Export Environm
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N T I S2010To register a patent, a
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N T I S2010breaches of law. The Nep
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N T I S2010Intellectual Property is
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Chapter 10Barriers to Service Trade
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N T I S2010Constraints in the touri
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N T I S2010Table 10.2Nepal GATS Com
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N T I S2010locations favourable for
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N T I S2010Barriers to Exports of H
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N T I S2010Institutional IssueThe s
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N T I S2010 Strengthening sub-natio
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N T I S2010Observations from enterp
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N T I S2010Nepal Ginger Producers a
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N T I S2010 Helping paper manufactu
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N T I S2010Computer Association of
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N T I S20105. Also related to the a
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N T I S2010The key principles inclu
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N T I S2010That being said, Nepal h
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N T I S2010Nepal Business ForumOn M
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N T I S2010Third, capacity developm
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N T I S2010expected to emerge from
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N T I S201012.7 Possible Options fo
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N T I S201012.8 RecommendationsThe
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N T I S2010GoN / MoF (2009), Econom
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N T I S2010Thapa, Ajit N.S. (2006).
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N T I S2010NEPAL TRADE INTEGRATION
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N T I S2010MainOutcomes Recommended
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N T I S2010NEPAL TRADE INTEGRATION
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N T I S20102. GINGERStrengths Tradi
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N T I S20104. LENTILSStrengths High
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N T I S20105. TEAStrengths Very fav
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N T I S20106. INSTANT NOODLESStreng
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N T I S2010 Review, simplify, and i
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N T I S20109. SILVER JEWELRYStrengt
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N T I S201011. CHYANGRA PASHMINA PR
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N T I S201013. TOURISMStrengthsNatu
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N T I S201015. IT AND BPO SERVICESS
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N T I S201017. EDUCATION SERVICESSt
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N T I S201019. HYDRO-ELECTRICITYStr
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Appendix 1Methodology for Export Po
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N T I S2010B. Data SourcesThe analy
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Appendix 2Market Attractiveness Ind
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N T I S2010Rank13) Tourism1 Germany
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Appendix 3Updated Legislative Actio
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N T I S2010specified management sys
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N T I S2010than pesticide residues
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Appendix 5Malaysia GAP (Skim Amalam
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N T I S2010E. Document ControlQMS d
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Appendix 7Good Agricultural Practic
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