Ministry of Commerce And Supplies - Enhanced Integrated ...

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