Iron and steel products have emerged as Nepal’s largest export with shipments amounting to Rs 6.26 billion in the first half of the current fiscal year.
According to the Trade and Export Promotion Centre (TEPC), exports of iron and steel products swelled 5.6 percent compared to the same period last year. In the first half of 2012-13, Nepal exported iron and steel product worth Rs 5.94 billion.
Entrepreneurs said that though the raw materials are imported from foreign countries, the volume of exports has remained good as products made in Nepal are cheaper and of superior quality. Apart from overseas markets, Nepali iron and steel products have a sizeable following in the domestic market too.
According to Mohan Katuwal, president of the Grill and Steel Business Association, the domestic market consumes iron and steel products worth around Rs 20 billion. “Compared to foreign products, Nepali products are cheaper and durable,” said Katuwal. “This is why exports have increased.” According to traders, India is the main market for products made of iron and steel.
“Demand for iron and steel products has increased in the international market as the construction sector is booming,” said Ishwori Prasad Ghimire, executive director of the TEPC. According to Ghimire, the export volume, however, is much lower than what the country could do.
“Due to the energy crisis, manufacturers are running under capacity. According to Nepal Rastra Bank’s study, the country’s iron and steel industry has been running at 66.55 percent of capacity as of the last fiscal year.
Also, there is lack of competent manpower,” said Ghimire, adding that exports could be much higher if the government addressed these issues. Ghimire said that there was a need to boost the morale of the producers by providing incentives.
Meanwhile, Sahil Agrawal, joint managing director at the Shanker Group, the manufacturer of the Jagadamba brand of iron and steel, said that the increase in the export value of iron and steel products was due to a rise in their prices.
“Compared to last year, prices of iron and steel products have swelled around 5 percent in the domestic market, and it could be the main reason behind the growth in the monetary value of exports,” said Agrawal. “In terms of quantity, the figure hasn’t risen much.” He added that iron pipes and steel were the most popular export items and that no new product had succeeded in surpassing them. In 2010, the government had launched the Nepal Trade Integration Strategy (NTIS) and identified iron and steel products among 13 products as exportable items having comparative advantage. The government has set a target to expand exports of the products considered to be export-oriented or identified as having relative advantage to Rs 1 billion each.
Though the targets remained unfulfilled last year, four goods out of six crossed the annual target within the first six months this year. Apart from iron and steel products, exports of cardamom have reached Rs 2 billion, posting an increment of 9 percent year on year. According to the TEPC, Rs 1.19 billion worth tea and Rs 1.20 billion worth pashmina were exported in the first half of the current fiscal.
Meanwhile, the failure to meet the target last year has prompted the government to revise the list of goods considered to have comparative advantage.
The Ministry of Commerce and Supplies has been holding discussions with the private sector in this regard. A ministry source said that goods having export and import potential, generating employment, having high productivity and giving native look would be accorded priority.