The first handmade industry, Bhaktapur Craft Printers, was established in the 1980s, as a UNICEF supported project. A few private sector companies started producing handmade paper and exporting it to developed countries. [break]
According to a study -- Handmade Paper in Nepal -- carried in 2007 by GTZ, this industry had a great potential in reducing rural poverty in the hill districts of Nepal since the production of lokta paper is done by using local resources, technique and human resources and as the value addition takes place in both rural and urban areas.
GTZ/INCLUDE is currently supporting the new project of Nepal Handmade Paper Association (HANDPASS) on "Enhancement of Sustainable Production of Lokta Handmade Paper in Nepal".
The industry is characterized by a few big enterprises and numerous small ones. The annual turnover of the industry is more than Rs 300 million, including both export and retail outlets. It is heavily dependent on exports. About 90 per cent of the production is exported.
According to the data collected by Federation of Handicraft Association of Nepal, handmade paper products were the fifth largest exported handicraft products.
From 2003 to 2008, the average annual export of handmade paper products was around Rs 265 million, according to the statistics collected by the Federation of Handicraft Association of Nepal (FHAN).
As can be seen in the chart, the annual growth of export of handmade paper products has decreased over the last few years. However, the degree with which export is decreasing is optimistic. Compared to 2007, exports in 2008 decreased by only 2.22 per cent.
The heavy dip in export in 2005 and 2007 was a combined effect of lack of workers, increase in prices of raw materials and the unstable political environment.
"There has been a shortage of workers as more and more people opt for foreign employment," said Shiva Subedi, managing director of Lokta Paper Craft, adding, "The unstable political and labor condition in Nepal has decreased international buyers´ trust on us to be able to supply on time, and there has been such instances as well."
In 2007/2008, Nepali handmade paper products were exported to 42 countries, according to FHAN. Thirty per cent of the handmade paper product export went to the US. Other notable export countries were France, Germany, Japan, the UK and Italy.
The handmade paper industry in Nepal currently employs about 4000 families in rural areas in paper making and another 2500 people in paper product making.
Over the last decade the industry has seen some technological innovations like increase in variety of colors through the dip dyeing technique, increase in smoothness of paper through calendaring process and improved techniques for cutting, pasting and binding, according to a 2007 GTZ statistics.
Although the industry is fraught with unhealthy competition in price and quality, the professionals in this sector see a lot of potential in through market promotion, both local and international, and paper and product innovations.
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