Nepal's growing cement industry is emerging as a beacon of hope for the nation's foreign trade, offering a promising avenue to address the widening trade deficit. The government's proactive implementation of effective policies has fueled a five-fold increase in cement exports in the fiscal year 2023/24, demonstrating a stark contrast to the previous year. This surge in cement exports not only offsets the overall decline in export trade but also holds the potential to reshape the trajectory of Nepal's foreign trade. The fact that Nepal exported cement and clinker worth approximately Rs 2.6 billion to India in the first seven months of the current fiscal year speaks volumes about its prospects. This is a remarkable surge from the Rs 779.3 million recorded in the same period last fiscal year. This increase becomes even more significant considering the seven percent decline in the overall export trade during the same period. Cement exports, averaging Rs 65 million monthly last year, have now escalated to Rs 295 million per month this fiscal year. This is a positive development and the government should leverage the potential of the cement industry to reduce the ballooning trade deficit.
Businessmen and industrialists have rightly expressed optimism regarding the impact of cement exports on the country's economic landscape. They emphasize the high value-added nature of cement, citing its potential for substantial growth in exports with effective governmental policies. For instance, plans are reportedly underway to export Arghakhanchi cement worth around Rs 2 billion this year, contributing significantly to the industry's positive trajectory. To enhance competitiveness against Indian counterparts, the government has been subsidizing cement exports, providing a crucial boost to the industry. The importance of coordination with governmental agencies, such as the Department of Forestry, Mines, and Customs, to overcome legal hurdles and further promote competitive cement exports cannot be underestimated here. With ongoing government support, Nepali cement holds the potential to gain a stronger foothold in the Indian market.
Cooperation for trade
The significance of leveraging the cement industry for export mainly lies in its capacity to reduce Nepal's trade deficit. Various cement brands, including Palpa, Arghakhanchi, CG, Sarbottam, Balaji, and Bahubali, exported to India capitalize on the value-added nature of domestically produced cement. Utilizing local limestones not only contributes to reducing the trade deficit but also positions Nepal as more self-sufficient, especially during times of heavy dependence on imported goods. With abundant limestone mines available domestically, the cement and clinker industry has flourished significantly in recent years. Private sector initiatives introducing modern technologies for quality cement production hint at the potential for further expansion in the export market. The government's support, including cash subsidies and electricity tariff discounts, has played a pivotal role in encouraging this growth.
The Cement Manufacturers' Association of Nepal estimates an annual production capacity of about 25 million tons, with only half consumed domestically. They have argued that Nepal could export cement worth about Rs 150 billion annually if the government chooses to reduce taxes, offering electricity tariff concessions and export subsidies. Identified markets in India, specifically in the Indian states of Uttar Pradesh and Bihar, could significantly contribute to achieving this goal. As a newspaper, we see the surge in cement exports not only as a positive economic indicator but also a testament to the potential for Nepal to become a major supplier of cement in the region and beyond. It is high time the government took all necessary measures to leverage the potentials of the cement industry to reduce the ballooning trade deficit and help bring economic transformation in the country.
