Garment Association of Nepal

Garment Industry - A brief Synopsis...

The garment industry significantly grew during the Industrial Revolution. The demand for cloth grew, so merchants had to compete with others for the supplies to make it. This raised a problem for the consumer because the products were at a higher cost. The solution was to use machinery, which was cheaper then products made by hand (which took a long time to create), therefore allowing the cloth to be cheaper to the consumer. The history of the garment industry in Nepal is little over two decades old. Before that, garments in Nepal meant traditional Nepalese garments that were exported to a limited number of countries in limited quantities.

The meteoric rise of the garment industry was brought about by the interplay of various factors, both domestic and foreign. The much-needed boost came at a time when garment-exporting industries in Asia were hit by the quota system imposed by importers in Europe and America. This coincided with rising labor costs in garment exporting countries undermining their low cost advantage. Producers were forced to look for alternative, cheaper locations. Hence, Nepal emerged as a relocation site, especially for Indian producers who had already hit the quota ceiling. They began pouring into Nepal to evade the quota constraint imposed by the US Government during the late 1970s.

This young industry's initiation was very haphazard and with no set policies by the government, though this scenario has changed quite a lot during the years. The government has set some policies, which are deemed friendly to this industry. As a matter of fact, the garment industries flourished due to the continuous efforts made by the industrialist albeit government policies aimed at developing this sector appeared once in a while.

Signals are being noticed in the country's export industries following the change in the world trade and global shift to liberalized economic policy. Since the garment industries being export based and have to compete with any countries, especially with the neighboring countries in the international market, the policies adopted by these countries are bound to have direct impact in the garment export of Nepal.

Nepal has a unique advantage to expand exports of readymade garments, as it has a competitive edge in the manufacture of ready garments due to the relatively low wage rates and low setting up costs of industry. Given the above favorable position Nepal could increase its exports by the diversification of both products and markets.

Product lines could be expanded to include dresses, suits, sweaters, children's clothing, nightwear and T-shirts. Diversification into the manufacture of towels, bed linen and similar items would also enable Nepal to increase exports substantially. The markets have to be diversified with more focus on countries such as European Union, Japan, Australia and the emerging markets in the Newly Industrialized Countries and the Middle-East countries.