Responding to impending crisis in carpet export to Europe - a key market for Nepali hand-woven carpet - Nepali carpet producers are trying to find new ways to cut costs so as to restore the competitive strength of the major export item from the country. [break]
As an effort to diversify the market, exporters have started to supply Nepali carpets to Brazil, Turkey, Japan, Gulf countries, among other emerging markets. Around 200 entrepreneurs are involved in carpet manufacturing and export.
"Producers and exporters should have been busy with taking orders and production during September to December for overseas exports in the upcoming year. But, we are upset with a fall in demand from Europe by over 30 percent," Bijay Bista, vice-president of Central Carpet Industries Association, told Republica on Saturday.
Bista said Nepal carpet entrepreneurs are eagerly waiting for the response from a trade fair focussed on carpet industry in Hanover, Germany, from January 15- 19. The response would be crucial in shaping the future of Nepali carpet export to Europe.
Bista said cost of production per square meter of carpet has shot up by Rs 1,200 to Rs 4,800 and Rs 8,000 depending on the quality over the year due to rise in wages, price of wool and cotton yarn. The cost of production has gone up by over 30 to 40 percent over the year.
"Over the year, price of wool and cotton yarn has skyrocketed to Rs 500 and Rs 165 from Rs 230 to Rs 105 per kg respectively. Minimum wages have also gone up by Rs 1,500 a month," said Bista.
Despite a double-digit growth in the carpet export in the first three months of the current fiscal year in terms of value, volume of export has shrunk sharply during the review period compared to last year´s figure.
Government data shows export price of carpet has gone up by 33 percent per square meter to Rs 7,220 during the first three months of the current fiscal year 2011/12 compared to the same period last year. However, the volume of export has dropped by around 5 percent to 238,936 square meters though the export in terms of value has grown by 27 percent during the period compared to the corresponding period last year.
Bista said increasing cost of production, which has of late become over 20 percent higher than that in India, a key competitor for Nepali carpet in the international market, has further weakened the Nepali export in the key markets of Europe and America.
In light of bleak prospects, carpet entrepreneurs are planning overtime to retain the market that is slipping out of its hands due to slowing market and increasing cost of production compared to the competitors.
"We are making a taskforce to bring down the cost of production of Nepali carpet by exerting pressure on the government to effectively implement the cash incentive scheme on exports as well as restore industrial peace," said Bista.
Traders have been complaining that the process to get export incentives is complicated and that the banks are ignoring the government request to provide concessional loans at 4 percent interest rate under the refinancing scheme.
"Besides, we are looking for new markets in addition to making efforts to retain traditional markets such as Europe and America to keep the industry afloat during this period of crisis," he added.
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