Until a year ago, around 400 carpet industries were operating in Nepal. This number has decreased to around 150.
"The main reason behind all the closures is the economic crisis, which has eroded the purchasing power of our customers living in destinations where Nepal exports its carpets," Kabindra Nath Thakur, president of the Carpet Exporters Association, told myrepublica.com. "As the country´s exports are suffering, more and more industries are pulling down their shutters." Germany, the US, Belgium, the UK, Switzerland and Italy are some of the major buyers of Nepali hand-knotted woolen carpets.
Internal problems relating to labor and frequent bandas are also eating away at the country"s carpet exports. "These problems usually prevent exporters from making timely delivery of consignments, ultimately annoying the buyers and compelling them to look for business partners in other countries," Thakur said.
According to the association, India makes deliveries to dealers in Europe and the US within 90 days of receiving the order, whereas it takes around 180 days for Nepali carpets to reach those destinations. This is yet another factor contributing to the decline in export of Nepali carpets.
More jobs are lost as carpet exports decline and industries fold. Until a year ago, the carpet industry was providing employment to around 500,000 people. "We now believe this sector is providing jobs to an estimated 100,000 people only," Thakur said.
The increasing unemployment rate is making various labor organizations nervous. "Representatives of some of the laborers´ unions now want to discuss ways to resurrect this industry," said Surendra Dhakal, advisor of the Carpet Exporters Association.
But there is more to the situation than meets the eye as some problems need to be addressed at policy level. India, for instance, supplies carpets 40 percent cheaper than Nepal, as the country has not levied any tax on this product. The government of Nepal, however, has slapped a 21 percent tax on its carpets. "We cannot compete with manufacturers of other countries if the government fails to scrap the provision of imposing tax on this product," Thakur said. "Currently even the industries that are in operation are not making optimal productions. If the government fails to do something, these industries will also be forced to close down their businesses."
Carpet exports went down by 21 percent in the first nine months of the current fiscal year.
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