The Government of Nepal’s (GoN) endeavor of including Pashmina in the Trade Policy 2009 under the special focus area and in the Nepal Trade Integration Strategy (NTIS) 2010 as and one of the export potential sectors has paid off by the recent rise in export.
The Government of Nepal (GoN) has identified pashmina as one of the sectors having high social and economic impact, poverty reduction, employment and the potential to reduce poverty and create employment. Pashmina, after gaining importance in the GoN’s trade strategy, NTIS-2010, has drawn attention among the public and the private sector as well as in the donor community to invest and support more, so as to make this sector competitive for export. There is no separate pashmina policy as such in Nepal; however, the GoN supports pashmina through various policies and is placed under the Special Focus Area in the Trade Policy-2009.
The pashmina industry in Nepal, due to its value addition to fashion apparels, is regarded ideal for export rather than for domestic consumption. However, it has been addressed as a handicraft product in domestic acts/laws such as the Industrial Enterprise Act 1992 and Intellectual Property Protection Act 1992. It has been addressed in several bi and multilateral trade treaties and agreements.
Pashmina, as a cottage industry shall not be subject to sales tax, excise duty and income tax, as facilities and concessions have been given in the Industrial Enterprise Act, 1992. The cottage industries are not liable to obey provisions of ‘Competition Promotion and Market Protection Act, 2063 (2007)’, for the promotion of competition and the protection of markets. The act has provided enough space for single competition, bidding, exclusive dealing, market restriction and tied selling except ‘misleading advertisement’ for marketing. Besides, the GoN has placed pashmina, along with silk, under a special focus area in the Trade Policy 2009, by giving special provisions, such as:
- The production of raw materials will be encouraged to ensure permanent and long term supply of primary raw materials required to produce pashmina and silk goods.
- Local entrepreneurs will be encouraged through the support in capital and technology as may be necessary for the rearing of Himalayan goats (Chyangra) for producing raw materials.
- Priority will be given to the quality testing and registration of trade marks in major exporting countries to maintain quality standards of the goods produced from pashmina and silk.
- Pilot projects based on cooperatives and improved technology will be implemented in potential rural areas under the supervision and surveillance of technicians for the development of farming of Himalayan goats (Chyangra).
- Exports will be encouraged by facilitating market access through conduct of promotional programs and development of competitive capacity.
- Assistance will be given to develop human resources as may be necessary for production and exports of pashmina and silk.
- Backward and forward linkages of pashmina and silk based products will be developed.
- The design center will be optimally utilized for the diversification of pashmina and silk based production.
Further, pashmina was found to have export potential in the Nepal Trade Competitive Study in 2004. Later, pashmina was included in the NTIS-2010, as one of the 19 priority sectors. Pashmina was analyzed for its
strengths, weaknesses, opportunities and threats. The NTIS-2010 suggests the following actions to be taken so as to boost the sector.
- Initiate Chyangra farming development activities on a pilot project basis at suitable locations to meet at least 20 per cent of the total pashmina yarn requirement.
- Set up pashmina processing plants on cooperative basis at appropriate locations (e.g. Upper Mustang, Mugu, Dolpa or Humla) to encourage poor livestock farmers in remote areas to enter into production.
- Implement a long-term sericulture project for the development of a silk sector in Nepal (pashmina shawls usually contain 30 per cent silk), based on the findings of a recent feasibility study.
- Set up a national institute with appropriate laboratory testing capacity and research and training facilities to provide quality assurance for pashmina and silk materials.
- Undertake afeasibility study to set up a pashmina yarn spinning plant in Nepal.
- Undertake a feasibility study to set up a pashmina knitting sector in Nepal.
Additionally, the GoN has supported the trademark registration process of pashmina in other countries
by agreeing to provide $121000, on the basis of installments, to the Nepal Pashmina Industries Association (NPIA).
Pashmina, as a handicraft product, has been addressed in some of the bi and multilateral trade agreements too. Especially, handicraft has been addressed in a number of trade agreements of Nepal with other trading partners. According to Trade and Export Promotion Center (TEPC), one of Nepal’s trade and transit agreement, ‘Trade and Payments Agreements’ between the then GoN and the Government of the People’s Republic of Bangladesh, signed in April 2, 1976, has listed handicraft, as one of the export items from Nepal to Bangladesh. Likewise, the same agreement has been made with other countries.
Similarly, exporters of handicraft products are allowed to fix the price of their products after being reviewed by Handicraft Association then allowed exporting, as agreed under paragraph 82 of the Working Party Report of the World Trade Organization (WTO).
After including Pashmina under the special focus area in theTrade Policy 2009, and enlisting it as one of the
export potential sectors in NTIS 2010, GoN’s endeavour has been paid off by the recent rise in the export of pashmina over a couple of years. In addition, the GoN’s support in re-branding to ‘Chyangra Pashmina’ has set another milestone for export. Likewise, the GoN has been successful in acquiring a Tier 2 project of $1.2 million under the Enhanced Integrated Framework to be implemented by the International Trade Centre (ITC) which will further improve; a) Supply side capacity, b) international marketing and brand image development, and c) institutional support to NPIA. Therefore, pashmina sector of Nepal is expected to see a brighter avenue of success in the days to come.
Rup Kumar BK, October 2012
This article was published in Nepal Trade Magazine, Issue 4, October 2012, GIZ
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