However, the Nepali carpet industry has lately confronted a serious question over quality, mainly due to infiltration of low-grade carpets from other countries, including China and India. Apart from that, rapidly rising cost of production propelled by depreciation of Nepali currency against the US dollar has added woes to the fragile carpet industry.
Carpet exporters estimate that the cost of producing woolen carpet has gone up to 40 percent over a year. In fact, the coexistence of rising cost of production and question mark over the quality has posed a serious threat to the future of Nepali woolen carpets that in 2000 had earned over Rs 14 billion. Sadly, the amount has squeezed to around Rs 4 billion in recent years.
Despite deepening jittery of the industry that mainly absorbs workforce from the lower class, the government´s apathy in giving a new lease of life to crucial industry is surprising. The government which is supposed to play a catalyst role in promoting woolen carpet exports, a vital sector for earning foreign currency, is instead turning a blind eye to the crisis.
Even cash incentive schemes announced for exportable products having more than 30 percent of value addition, including carpets, have produced no result, thanks to the complicated administrative process. Worse, the government-announced refinancing facilities for concessional loan to exporters, has not yet been implemented. In addition, the continuing labor unrest in the highly labor-intensive industry has made it difficult to make timely delivery of orders.
To bail out the vital industry in terms of employment and foreign currency earning, the government should come up with package programs taking into confidence the carpet entrepreneurs. Like Europe, the US also has a huge potential market for Nepali carpets. Hence, the government and carpet entrepreneurs should work toward lowering its dependency on the European market, and put in efforts to tap the North American market while at the same time explore new destinations in the emerging economies of Asia.
In addition, the government should intensify the incentives scheme, create favorable industrial environment for good labor relations and encourage sheep farming to reduce dependency on imported of wool.
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