Exports of high potential products saw massive decline in FY 2019/20

Published On: August 28, 2020 10:05 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Aug 28: Export earnings from goods identified by the Nepal Trade Integration Strategy (NTIS) 2016 as having high export potential fell by 18.65% in the last fiscal year, mainly due to lack of quality branding of products in the international market.  

The government has identified nine products--cardamom, ginger, tea, leather, footwear, medicinal herbs and aromatic plants, woolen carpet, pashmina and yarn and textile products-- in the NTIS group. These goods are considered to have competitive advantage and are given priority in various government schemes to boost their selling in the international market. 

However, the goods have failed to give impressive returns almost every year, and it is even worse in 2019/20, with a fall of double digit point percentage in their export earnings.  According to the Trade and Export Promotion Centre (TEPC), the revenue earned from export of these goods dipped to Rs 30.11 billion last year from Rs 37.01 billion in the previous year. 

The government authority was scorned when it revised the NTIS in 2016, on the ground that it handpicked the products without assessing their potentials. However, the government says that a thorough study was conducted before listing these goods as high priority. 

According to the trade experts low-quality of the products were among the reasons behind their poor performance. “The government needs to revise the export basket before promoting them in the international market,” said former commerce secretary Purushottam Ojha. 

The government provides a cash incentive equivalent to 3-5% of the export value of NTIS products. Traders get a five percent cash incentive for exporting processed tea, large cardamom, ginger, leather goods and processed herbs and oil products with a value addition of at least 50 percent.

Similarly, a three percent cash incentive is given for exporting pashmina products under the Chyangra Pashmina brand, textiles, woolen carpets, and yarn made of polyester, viscose, acrylic and cotton. The government has been providing cash incentives to different industries since FY 2011/12, a year after the ambitious program was launched in 2010.

Except for medicinal plants, export earnings from the rest of the eight NTIS products went down last year. Exports of medicinal herbs inched up 5.31%, to Rs 1.51 billion.  

Raw leather saw the biggest drop of 66.65% in its export revenue, making up Rs 165 million. Export of yarn declined by 26% to Rs 12 billion, woolen carpets declined by 17.32% to Rs 6.16 billion and footwear declined by 16.72% to Rs 754 million.

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