Soft loan provision can revive Nepali carpet industry

30 Jun '11

2 min read

Over the past few years, factors like soaring cost of production, mounting interest rates and political instability coupled with a rise in raw material prices and labour cost have badly hit the carpet industry of Nepal.

However, if the Government makes provision for soft loans to the carpet industry, it would greatly relieve the troubled sector, according to the Nepal Carpet Exporters Association (NCEA).

The NCEA said that the country's Finance Minister Bharat Mohan Adhikari had earlier promised that under the new budget, provisions would be made to provide soft loans to the carpet industry at four percent interest rate, to revitalise the industry, which was once the country's biggest foreign exchange earner.

Nepal imports raw materials worth millions from New Zealand each year, which includes around 45,600 kg of wool. However, the two-fold growth in the prices of almost all items since mid part of April 2011 has come as a blow to the already troubled carpet industry.

Meanwhile, the export price of wool which stood at NPR 250 per kg last year has now jumped to NPR 450 per kg. The wages for labour have also increased sharply from last year's NPR 4,600 per month to NPR 6,100 per month. Accordingly, the price quoted for Nepali carpet has also doubled affecting the export orders.

In addition, the carpet producers have obtained loans at 15 to 16 percent interest rates. All these factors together have rendered Nepali carpets less competitive in the world markets.

Though there is no inflow of new orders in the current year, foreign data indicates a rise of 17.5 percent in carpet exports, which can be completely attributed to orders that were received during last year but have been executed this year.

Hence, the NCEA has called upon the Government to devise a separate Carpet Policy. It has also suggested that the Government should constitute a permanent high level Carpet and Wool Development Council which would work for up-gradation and development of Nepali carpet industry.

The NCEA has claimed that the Government has failed to execute the recommendations of the high level working committee constituted after 2009-10 budget. It has, by way of a 25-point memorandum, urged the Finance Minster to place the industry on the country's priority list.

Fibre2fashion News Desk - India

More Textiles News - Nepal...