Textile units in Nepal will shut down operations from November 1, 2018. They say their concerns are not being addressed. Textile manufacturers are especially against the cancellation of the Value Added Tax (VAT) refund system in textiles, which came into effect from this fiscal. They say the decision has further deteriorated the competitiveness of Nepali textiles in the domestic as well as international markets.

Till the last fiscal textile manufacturers had been enjoying a 70 per cent VAT refund. They say, the government should either review its decision regarding the cancellation of VAT rebate on textiles or pay back the equivalent amount to textile manufacturers through any other means.

Similarly, textile manufacturers have also urged the government to curb the illegal imports of foreign textile products. The textile sector in Nepal includes manufacturing of textile, yarn, jute, woolen carpets, garments, pashmina and cotton terry towels. These sectors are major manufacturing activities and are also major export products of the country. Textile and yarn are more important for the local domestic market.

Nepal’s textile sector, which is mostly cotton and synthetic based, is passing through a tough phase. A large number of textile factories in Nepal have either closed down or are on the verge of closure due to labor unrest, high taxes, unclear government policies etc.