Nepali readymade garment (RMG) is set to get duty free access in the US market.
The embattled industry might once again get an opportunity to ramp up exports of readymade garments, pashmina and leather products, as the US Senate has recently endorsed a bill for duty-free quota-free (DFQF) entry for these goods into the world’s largest economy, according to Garment Association Nepal (GAN).
The latest bill, which will become law once it gets US President Barak Obama’s seal, is expected to give a new lease of life to the industry which virtually collapsed after the Multi Fibre Agreement (MFA) expired in January 2005, the association said, adding that Nepal can enjoy duty free facility till December 9, 2025 once the new law comes into effect.
“Once the new law comes into force, Nepali readymade garments, pashmina and leather products, will get zero-tariff access into the US market,” the release added.
Currently, the US government is imposing 16.5 percent tariff on import of cotton apparels.
The Bill was introduced in the US House on February 2, 2015 and it garnered positive response after the devastating earthquakes — of April 25 and May 12 — shattered Nepal’s economy.
According to GAN, there were over 400 apparel factories across the country in 2001 with investment of around Rs 6 billion. The garment industry was employing 450,000 people. But the industry collapsed after phase out of MFA coupled with deteriorating industrial environment in the country, power shortage, labor unrest, Maoist insurgency and higher interest rate. As a result, Nepali RMG lost competitive advantages over Bangladeshi and Vietnamese garment industries in the global market. “Once the country’s top exporter and one of the large employment providers, the garment industry can revive again and attract more investment,” the release said, adding that only around 50 factories are in operation at present.
Export of RMG accounted for 20 percent of country’s total export trade in 2001. But exports plunged to Rs 5.29 billion in Fiscal Year 2014/15, according to GAN figures.