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N T I S2010The value added of those exports is approximately 75 per cent of the total exports, assuming the value of rawmaterial imports is around 25 per cent of the export value (see below).Types of Exported Products: The main types of exported wool products are pullovers, hats, gloves, andshawls.Current Export Destinations: The main destination (with share of exports) is the EU market in in 2008 (47 percent), followed by the US (18 per cent), Canada (14 per cent), and Japan (10 per cent).Potential Export Destinations: The most attractive markets appear to be the EU markets and Japan. Thosemarkets have grown fast in recent years and offer preferential market access.Nepal’s World Market Share: Nepal’s share in world exports is very low (0.1 per cent).Trade Balance: There is little import of such products, but it is estimated that yearly import of wool for theproduction of these products is around US$4 million, around 25 per cent of the export value.Dynamism of Exports: Export has grown significantly since 2004 when they were only US$9.4 million.Index 2: World Market ConditionsTable 2.42Total World Export Value of Wool Products, 2005-2009 (US$1,000)2005 2006 2007 2008 200912,768,113 13,448,478 14,673,757 15,920,594 n/aMarket Access Conditions (Tariffs and NTBs): There are high tariff barriers for these products, but Nepalenjoys preferential access in the EU, Canada, and Japan, although not in the USA. MFN tariffs in major marketsare: EU (9-12 per cent), Canada (16-18 per cent), and Japan (6-17 per cent), which means that Nepal has asubstantial advantage if rules of origin requirements can be fulfilled. 82 No such preferential access is grantedby the USA (MFN 2-16 per cent).Major Competitors in World Market: By far the largest exporters of such products are China, Hong Kong,and the EU, but traded products are very heterogeneous. For example, unit values for US import of the mainwoolen products that Nepal exports vary by factor 10, with Nepal being at the lower end of that range.Index 3: Domestic Supply ConditionsProducers: There are 25 organized knitting units 83 , and more than 258 entrepreneurs are involved in theproduction and export of woolen products. 84Production Capacity: The total annual capacity of organized industries and household units is 4 to 5 millionpieces of different types of woolen products. 85 The present capacity can be increased by 50 per cent within82Data from Eurostat shows that 90-95 per cent of Nepalese exports enter under preferential rates.83Nepal Pashmina Industries Association (NPIA).84Federation of Handicraft Association of Nepal, Handicraft Trade Directory, 2007-08.85Calculation based on the actual exports of 3.7 million pieces to countries other than India and domestic sales to tourists. Data source forexports to countries other than India: Trade and Export Promotion Centre, Nepal Overseas Trade Statistics, 2007/08.NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT85
N T I S2010five years. The firms in the organized sector have more than 2,000 knitting machines and 3,000 knitters andfelt product-makers in Kathmandu and the districts of Lalitpur, Bhaktapur, Kavre, Makwanpur, and Chitwan.In addition, 15,000 to 20,000 women in these districts are skilled and capable of producing hand-knittedwoolen products as required by the foreign markets.Quality of Product: The quality of woolen products depends on (a) the quality of wool, (b) knitting technique,and (c) wool yarn dyeing facility. Exporters have reported that the wool quality is not always sufficient and thatthere is a lack of laboratory equipment to crosscheck the quality and grade of wool supplied by the importers.They also complained about a lack of sophisticated knitting technology and inadequate dyeing facilities.Productivity: Productivity of the trained and skilled workers is good.Availability and Quality of Labour Force: Skilled and semi-skilled workers are available for further increase inproduction in case foreign market demand surges. Workers are trained on-the-job.Labour Cost and Overall Production Cost: Labour cost has increased slightly due to recent national inflationarypressure. Overall production cost is average.Level of Processing Technology: Various types of process include (a) hand-knitting, (b) hand-driven machineknitting,(c) motorized and computerized machine, (d) hand- and foot-driven weaving loom, and (e) handmolding and felting. The types of technique used depend on the buyer’s requirements.Cost and Quality of Infrastructure: Overall cost of infrastructure is low; however, costs of electricity andtransport are considered high.Efficiency of Domestic Supporting Industries: It is estimated that about 1,200 to 1,500 MT of annually requiredwool and woolen yarns are imported from Australia, China, and New Zealand. The imported wool is suppliedmainly to two spinning mills in Kathmandu, which supply white yarns to knitters. Knitters give these yarns todyeing plants to dye according to the buyer’s colour combination requirements. Exporters and knitters haverealized the limited capacities of existing spinning and dyeing plants in Kathmandu to meet foreign marketdemand.Domestic Demand: Approximately 10-15 per cent of the total output is sold in the domestic market, particularlyto schools students, security guards, police, and the army.Business Environment: Quality of communication and air freight services is very good.Government Initiatives and Donor Involvement: Wool products are included in the list of priority exportproducts as identified in the Government’s recent Commercial Policy 2009. 86 The government has indicatedthat a feasibility study will be undertaken for an integrated programme of wool and woolen goods productionand Tibetan types of wool will be developed. Recently, two separate business institutions, Woollen ProductsDevelopment Association (WPDA) and Felt Industries Association of Nepal (FIAN), have been established forthe promotion and development of woolen products in Nepal. Both these associations have contemplatedsome programmes like sheep farming development, product design and development, human resourcedevelopment, and marketing promotion as priority activities and are expecting technical support from thegovernment and donors.Prospect for Domestic Supply Conditions: Increasing domestic production of wool has a high potential,especially by using Vyanglung (a type of sheep carrying high quality wool which can survive in the high mountainregions of Nepal) sheep. But the population of Vyanglung is currently only 4-5 per cent of the 8.2 million86Ministry of Commerce and Supplies, Commercial Policy 2065.86NEPAL 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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N T I S2010exporters. Nepal permits
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N T I S2010RankCountryExports Nepal
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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 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 84 and 85: N T I S2010Availability and Quality
Page 86 and 87: N T I S2010Attractive Markets for S
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Page 92 and 93: N T I S201012345678910# Name of Ste
Page 94 and 95: N T I S2010Export Prospect: Accordi
Page 96 and 97: N T I S2010Gender Impact: Female wo
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
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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
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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
Page 144 and 145: N T I S2010Most issues reported abo
Page 146 and 147: 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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