Income from high export potential products drops

November 26, 2017

The Kathmandu Post, 25 Nov 2017 

Export earnings from nine high export potential products identified under Nepal Trade Integration Strategy (NTIS) declined by 15 percent in the first three months of the current fiscal year, largely due to exports hurdles and too much involvement of middlemen.

Except tea, hide and medicinal herbs, other items included in the NTIS products list performed poorly.

The NTIS 2016, a revised form of NTIS 2010, has identified nine products including cardamom, tea, woolen carpet, animal hide, ginger, medicinal herbs, pashmina items, footwear and all fabrics, textile, yarn and rope under the high export potential products.

According to a Nepal Rastra Bank report, export earnings from these goods dropped to Rs4.85 billion in the first quarter of the current fiscal year from Rs5.71 billion in the same period last year.

Tea exports grew 67.5 percent to Rs118.1 million. Similarly, the export of animal skin increased 66.65 percent to Rs81.8 million and medicinal herbs increased 36.52 percent to Rs132.7 million.

However, ginger witnessed the largest fall of 81.81 percent. As compared to the export earnings of Rs117.7 million in the first three months of 2016-17, ginger export stood at only Rs21.4 million during the review period.

The fall in ginger export can be attributed to the hurdles that the traders faced time and again with India, according to traders. India is the main key market for Nepali ginger. Around 94 percent of Nepal’s fresh ginger is exported to India.

Ginger export to India was disrupted after Indian customs officials started imposing 5 percent goods and service tax (GST) on Nepali produce. The Indian authority has asked Nepali traders to get necessary permits from India’s central government to get a waiver on import duty, traders said.

This trade barrier led to the loss worth millions of rupees. Only last month, the Indian authorities removed the GST on Nepali ginger.

Last year too, the Indian authorities had halted Nepali ginger exports to India, stating that Nepali ginger contained traces of harmful pesticide.

Cardamom was the second among the NTIS products that witnessed heavy plunge in its export. Export earnings from cardamom plunged 54.2 percent. Likewise, export earnings from footwear and pashmina items dropped 15.41 percent and 10.62 percent respectively.

The earnings from woolen carpet and textiles and yarns also fell 10.10 percent and 9.26 percent respectively.

Commerce Ministry Spokesperson Ravi Shankar Sainju said that due to lack of coordination among the stakeholders, including the government agencies, the NTIS products have performed poorly. “Lack of products diversification and failing to explore new market are also the reason. Likewise, involvement of middleman in the agriculture produces, rather than the main buyers, have also hit the exports,” Sainju said.

According to him, Nepali goods to India are being traded by many Indian buyers, who do have official licences for trading. “As a result, Nepali products have been facing problems time and again,” said Sainju.