Hanging by a thread

Nepal’s garment industry can be revived if the garment processing zone is operated proficiently.

Once upon a time, the export of readymade garments was a roaring business in Nepal. Emerging as a spillover business in the late 1980s, it grew exponentially during the 1990s and peaked in the early 2000s before going into freefall from 2005 with the end of the quota system in international trade in textiles and clothing. The end of the quota system brought free trade in this previously restricted global commerce. Free trade relieved competent countries like China and India, which had been restrained by quotas, while it hurt countries like Nepal which used to enjoy the ‘quota rent’ provided by the under-utilisation of the quotas allocated to them by the importing countries.