Problems of Industry In Nepal – Efforts And 10 Solution

The industry sector is the main pillar of economic development in Nepal because rapid industrialization supports economic growth. After the internalization of globalization and liberalization in Nepal, the industry sector is prioritized in most of the Nepalese policies but the expected outcomes have not resulted yet. This article discusses the importance and problems of industry in Nepal, what we did to reform in the past, and some realistic suggestions for the solution.

Importance of Industry in Nepal

Despite almost 60.4 percent people are involved in agriculture sector in Nepal, the importance of the industrial sector is undeniable. Nepal has long-term plan to increase the contribution of industrial sector to GDP, which means that industrial sector is truly prioritized. Mainly there are 4 (Four) importance of industry in Nepal.

1. Contribution to the GDP: The manufacturing sector has a 5.65% contribution to the GDP in the fiscal year 2078/79 and 5.53% on average in past five years. After the implementation of the 15^th periodic plan, it is targeted to reach such a contribution of industry up to 6.5%.
2. Investment-friendly environment creation: Rs. 2500 Billion has been invested in the Large, medium, and cottage industries.
3. Employment Creation: The secondary sector (Including Industry and manufacturing) contributes 8.1 percent to total national employment.
4. Export Promotion and reduction of trade deficit.

The Problems Of Industry In Nepal

Nepal is struggling to increase the contribution of the industry sector to GDP by expanding industrial production but this sector is facing some problems as follows:

1. Lack of entrepreneurial thinking
2. Low availability of capital in the productive sector
3. Nepalese industrial products lack in cost competition and quality
4. Exportable products are not diversified
5. Unable to link the industry sector with agriculture, forest, mines, and minerals sectors.
6. Failure to connect capital, skills, raw materials, and technology [Interested on Capital Market? Full Article : NEPSE Technical Analysis]
7. Poor technologies adaptation pace
8. Weak industrial value chain
9. The attraction of businesspersons in import trade
10. Inadequate research and development practices
11. Lack of skilled technology handler
12. Low utilization of domestic raw material
13. Inadequate incentives to encourage start-up businesses
14. The slow expansion of industrial infrastructure
15. Lack of Professional ethics
16. Careless toward social responsibility
17. Poor industrial relations

Efforts In The Past

In the past, positive action and efforts had been taken to address the problems of industry in Nepal. Major arrangements for the industry sector in Nepal are as follows:

Policy Arrangement

1. Industrial Policy, 2049 B.S. (Date are in Nepali B.S)
2. Industrial Policy, 2067 B.S. (With the dismissal of previous industrial policy)
3. Patent, Design, and Trademark Act, 2022 B.S.
4. National Intellectual Property Policy, 2073 B.S

Structural Arrangements

1. Industry, Commerce, and Supply Ministry
2. Department of Industry
3. Investment Board, Nepal
4. Industrial Promotion Board
5. One Point Service Centre
6. Special Economic Zone: “Bhirahawa SEZ” is established and run since 2075.

10 Solutions Of The Problems Of Industry In Nepal

Despite having the above-mentioned arrangements, the industry sector has various problems to be flourished. To solve the problems and increase the contribution of the industry sector to GDP, the following suggestive action should be taken.

1. Policy improvement and update
2. Investment security
3. Encouraging foreign direct investment
4. Implementation of SEZ to the fullest
5. Revival of the rug industry
6. Use of advance and globally accepted technologies
7. Strengthen economic diplomacy
8. Expansion and development of industrial infrastructure
9. Use of knowledge, skill, capital, and technology of Diaspora
10. Mobilizing investment on the basis of public-private partnership

Conclusion

Being a least developed nation, Nepal is facing many problems in industry sector. On the other hand, opportunities within this sector are still to be grabbed. Government, private sector, investors, and all stakeholders should come together for holistic improvement sector.

In my opinion, the first action for reform is that remittance from foreign employment should be mobilized to the industry sector.

FAQ

1. How many industries are there in Nepal?

In Nepal, large industries are 1273, medium industries are 1983, and small industries are 5401 (As on Falgun 2078/079)

2. How many industrial areas are there in Nepal?

There are 10 Industrial Zones  in Nepal.