With the recession in the US and the EU showing signs of slowing down, Nepali garment manufacturers have started to receive fresh inquires and orders from their overseas buyers. The new inquires from the US mean a lot to Nepal's garment industry since it is the largest market for Nepali readymade garments. Inquires from India are also starting to trickle in.
"We've been getting inquires from US buyers of late," said Prashant Pokhrel, president of the Garment Association of Nepal (GAN). The easing of the recession and the tabling of a bill at the US Senate to allow preferential entry for Nepali garments are the reasons for the sudden increase in inquires, said garment manufacturers.
However, garment manufacturers aren't too excited despite the surge in inquires and orders. "First, these inquires should be confirmed; and we should be in a state to fill the orders by the stipulated time," said Pokhrel.
Buyers and manufacturers both are still reluctant to make a deal. "The importers are still hesitant to place orders and we manufacturers are also unsure because of the political situation in the country," said Udayraj Pandey, vice president of GAN.
Pandey added that they had been getting more inquiries than orders. Even the orders they have received are for small quantities which are not enough to keep the factories running round the year. "Without bulk orders, we can't reopen our factories," said Pandey.
As of now, only seven to eight garment factories are in operation. However, garment manufacturers say that around three dozen garment factories can resume production at short notice if bulk orders start flowing in.
Garment exports to the US declined by 56 per cent in the first seven months of 2009. The latest statistics of GAN shows that Nepal shipped readymade garments worth US$ 4.1 million during the period against US$ 9.4 million last year. However, there was a jump of 8 percent in July after a continuous double-digit decline for eight consecutive months.
Garment manufacturers are also hoping exports to India will pick up if India removes the 4 percent additional special duty as a result of the talks held by Prime Minister Madhav Kumar Nepal during his recent visit.
"The Indian commerce secretary has assured our commerce secretary regarding this," said Pokhrel. For the last three years, India has emerged as one of the largest buyers of Nepali garments with exports almost matching those to the US.
According to Pandey, Nepal and Bangladesh are competing in the Indian market, and the removal of the 4 per cent additional duty will make Nepali garments equally cheap for Indian buyers.
