Manufacturing

Sector
Overview

Nepal’s manufacturing sector is rich in potential, both for large-scale projects and innovative small-scale projects. The government is committed to supporting industrialization by promoting investment in the manufacturing sector. Industrial Districts and SEZs have been created to ensure a competitive and investment friendly environment and to simplify administrative procedures. Some main areas of investment are: FMCGs, garments, cement, pharmaceuticals, and metal and metal products. With a population of around 28 million, rising disposable incomes, rapid urbanization, untapped but growing rural areas, and favourable regulatory environment, Nepal possesses huge potential for fast moving consumer goods (FMCGs). In fact, the sector has been growing at a remarkable pace (at around 20% annually) and multinational companies like Unilever, Carlsberg, Coca-Cola, PepsiCo, and Dabur have been able to excel. The garment industry in Nepal has grown significantly in the last decade, with relatively inexpensive labour, the government’s favourable policies, the existence of a domestic market as well as export potential, and incentives for the export of garments attracting investors. Nepal has very high Revealed Comparative Advantage in many garment products and has been occupying good share of the international market. Iron and steel products have also been identified as sectors where Nepal has comparative advantage. The export share of the sub-sector has grown remarkably in the last few years (NPR 6.3 billion in the first half of 2014/15) and there has also been consistent growth in the domestic consumption (NPR 20 billion in 2014/15). The cement industry is one of the most successful examples of FDI in Nepal. There are opportunities to make use of about 1.25 billion metric tons (estimated) of best cement grade limestone deposits. In fact, the US$359.18 million large Hongshi Shivam Pvt. Ltd. has already started production and while the FDI amount of US$140 million of Huaxin and US$550 million of Dangote Cement have been approved by the IBN. Similarly, many attractive investment opportunities can be found in the medicine and health care supply manufacturing that has a market of nearly USD 433 million and has been growing consistently at 18-20% per year for the past 7-8 years, according to some estimates.

Sectoral
Opportunities

Fast Moving Consumer Goods (FMCG)
Garments
Assembly Plants
Pharmaceuticals
Electronics

Key Facts

Contribution in

National GDP

26.9%

Expected

Growth in 2019

5.1%

Increase in production

in last two decades

3.2%

Cultivable

Land

25%

Population employed

in the sector

70%

Share of agriculture goods

in total commodity exports

31.1%

Productivity

Per hectare

$3278