Nepali footwear industry eyeing export market

The Nepali footwear industry has started to target the export market while producing goods and investment flow in this sector has also increased heavily in recent years. More than 200 factories with total investment of around Rs 30 billion are in operation but most of them have been running under capacity due to the small domestic market, said Hom Nath Upadhya, president of Leather Footwear and Goods Manufacturers’ Association of Nepal.

“Nepali industry has been producing 26 million pairs of shoes and slippers annually while demand in the country is estimated to be only 40 million pairs,” as per the data provided by the association.

It is reported that 65 per cent of the annual demand of footwear is met through domestic production.

“The footwear industry is a fashion based industry and Nepali companies can reap benefits from unique designs,” said Upadhya, adding, “Despite having the production capacity, we can’t sell more than 26 million pairs because customers are choosy and also opt for foreign brands.” He elaborated that since it is a fashion based market, the 65 per cent market share that local companies have is pretty reasonable.

“As the investment in footwear industry has been increasing, we must look for avenues to boost exports,” said Ram Krishna Prasain, executive member of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), who represents the commodity association. “Most of the manufacturing industries are operating under capacity and it is because they have been targeting the domestic market only and hardly two or three companies have been exporting footwear.”

Those who are exporting footwear to India and China have performed well. And the footwear industry currently is generating employment for 90,000 individuals which would increase along with more capacity utilisation.

“Since the domestic production has increased, import of footwear has been gradually declining,” according to Upadhya. However, the country is largely dependent on India and China for raw materials and the annual import of raw materials stands at Rs five billion.

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