Nepal's apparel sector at a crossroads

The industry has the potential to create a niche market centred on sustainable apparel manufacturing.

The garment sector of Nepal is at a critical juncture as it is set to graduate from the Least Developed Country status in November 2026. Nepal is likely to face higher tariffs and tough policies of rules of origin. The apparel sector, in particular, boasts the usage of traditional hand-woven designs such as Dhaka fabrics, allo (Himalayan Nettle), felt, and cashmere fabric made into apparel. These fabrics are used with modern designs, providing our local artisans an edge over others. Nepal continues to enjoy duty-free entry into the European Union under the Everything but Arms ( EBA ) program. The global apparel market is projected to grow from USD 1.9 trillion in 2025 to USD 2.6 trillion by 2035. By incorporating sustainable, ethical and locally designed organic products produced by local artisans, Nepal can utilise this opportunity to create a niche in the global market. However, whether Nepal can develop a robust, self-sustaining export ecosystem and overcome its reliance on tariff exemptions remains to be a central challenge.