Association Nepal (GAN) has asked the Ministry of Commerce and Supplies to
propose for Free Trade Agreement (FTA) with the US in the next Trade and
Investment Framework Agreement (TIFA) council meeting to be held in Kathmandu.
During the Readymade Garment Management Committee meeting chaired by secretary
of Ministry of Commerce and Supplies Lalmani Joshi yesterday, the association
asked the ministry to propose for FTA with the US to boost exports of readymade
garments and pashmina to the US, take lead in passing the Special Economic Zone
(SEZ) Bill that is in the parliament for the last three years and clarify on
the 10 per cent countervailing duty (CVD) charged by India on the export of
Nepali readymade garments to India.
"There is confusion over the 10 per cent countervailing duty charged by
India on the export of Nepali garments to India," said president of GAN
Uday Raj Pandey, adding that the Commerce Ministry has to clarify on the issue
as the 10 per cent countervailing duty has made Nepali garments less
competitive in the Indian market which in turn has hurt exports.
The Readymade Garment Management Committee has representation from the Ministry
of Trade and Finance. "The concerned heads of the Customs Department themselves
are not clear on the countervailing duty," he said, adding that the
association, after getting the real picture, will decide on how to move
Similarly, the association has also asked the Commerce Ministry to take the
lead in passing the Special Economic Zone (SEZ) Bill that is in the parliament
since the last three years. "The Industry Ministry alone has not been able
to pass it, so we have asked the Commerce Ministry to help pass the SEZ Bill
that is key to promote exports," said Pandey.
SEZ will also house Garment Processing Zone (GPZ) that will boost the exports
of garment sector, according to the association.
The country is preparing for the Investment Year and needs to create a
favourable investment climate and SEZ could ensure foreign as well as domestic
investors of a conducive environment, he said, adding that FTA with the US will
help US investors bring in investments to Nepal and Nepali readymade garments
and pashmina will also get the most favoured nation status and Generalised System
of Preferences (GSP) facility that could help boost exports. "It's a
win-win situation for both countries."
"The TIFA council meeting that should have been held earlier has been
postponed repeatedly, but this time the government should hold it and propose
for FTA to make the TIFA a more practical vehicle for the promotion of Nepali
garments and pashmina in the US market," according to the president of the
association. "Nepal must propose the FTA during the TIFA council meeting
that has been rescheduled for the last week of September."
At one time, the country used to export readymade garments and pashmina worth
Rs 15 billion but it has come down recently. According to the central bank's
data, in the first seven months of the current fiscal year, the country has
exported readymade garments worth Rs 347.6 million to India and readymade
garments worth Rs 2.80 billion to the third countries.
"Similarly, the country has exported pashmina worth Rs 1.87 billion to a
third country and pashmina worth Rs 21.4 million to India," the central
bank's data has revealed. However, exports of readymade garments and pashmina
to third countries, except India, have increased this fiscal year as compared
to the last three fiscal years.
Garment exports to third countries
Fiscal Year — exports
2009-10 — Rs 2.29 billion
2010-11 — Rs 1.89 billion
2011-12 — Rs 2.80 billion
(Figures of the first seven months of the fiscal year except India. Source: Nepal Rastra Bank)