Nepal’s readymade garments exports in the first half of the current fiscal increased 11 per cent compared to the corresponding period of the previous fiscal. However, the expiry of the multi fiber agreement in 2005 has hit the industry hard. The agreement provided duty-free access for Nepali garments to the US. Since then, over 85 per cent of garment factories have pulled their shutters.

Nepali readymade garment producers feel if they are given facilities they can be more competitive in the global market. As of now the high cost involved in importing raw materials and exporting finished products is the major reason for Nepali garments being less competitive in the international market.

Incentives to the sector can have a significant impact on the growth of small and medium enterprises, ancillary industries and also generate jobs. A garment processing zone is being developed to promote the export of readymade garments. The aim is to revitalize the garment sector by providing low-cost financing for investment in the latest machines and kick start the economy. The industry has asked for tax incentives and export incentives.

Major export destinations for Nepali garment products are the European Union, India and the US, among others.