The Government has been levying extra fine on the bank guarantee that the garment entrepreneurs obtain to offset the losses incurred, if any, in respect of inward shipments.Garment manufacturers in Nepal have asked the Government to do away with the extra fine that it levies on the advance payment for raw material imports, so as to revitalize the export sector.

The Government has been levying extra fine on the bank guarantee that the garment entrepreneurs obtain to offset the losses incurred, if any, in respect of inward shipments.

Uday Raj Pandey, President, Garment Association – Nepal (GAN) said that the extra fine paid for bank guarantee raises their production cost by almost 50 percent, and hence demanded removal of the same.

He elucidated that though the amount paid by way of such extra fine is refundable, it adds to the initial production cost and as a result the Nepali garment industry is losing its competitiveness.

GAN has forwarded its recommendations in this regard to the Ministry of Finance. The garment industry is optimistic that the Government would incorporate its suggestions in the forthcoming budget to revitalize the sector.

In the context of Government’s apathy to implement investment-friendly strategies and programmes, GAN Chief said that they wish that their suggestions are seriously considered and implemented in totality.

He said that the proposal for developing an Export Processing Zone (EPZ) for Readymade Garments of Nepal is also awaiting execution. Meanwhile, the garment businesses, he said, have also urged the Government to aid revival of the ailing units.

The Government in its last budget gave an assurance that it will constitute a Sick Industry Fund, but that promise is still unfulfilled.

In addition, the ongoing workers’ strife in the industry has pushed several large scale industries on the brink of closure. Presently, only a few large scale garment industries are functional. Momento, Sherpa Outwear, Surya Nepal and Amy Apparels are some of the surviving industries.

GAN has also urged the Government to make soft loans available to the garment industry at four percent interest rate.

The GAN Chief said that the garment export figures are not much impressive this year, as during the initial 10 months of the current fiscal readymade garments worth only NPR 3.26 billion have been exported, which is 6.26 percent of the country’s overall exports.

However, this year too, the garment industry aims to achieve the last year’s figure of NPR 4.35 billion.

During the initial 10 months of current financial year, Nepali garment industries imported NPR 2.25 billion and NPR 500 million worth of raw materials from India and China, respectively.
POST: 2025-04-20