Market, product concentration to hit trade

KATHMANDU, MAY 2: 

Market and product concentration will again hit the country’s international trade hard anytime. 

The country has earned almost half of the total export receipt from around nine products which means export concentration has increased, which could hit total export earning anytime again like before, in absence of product diversification. Similarly, one fourth of total export receipt comes from India increasing country’s vulnerability due to single market concentration.

Woollen carpets, textiles, readymade garments, pashmina, pulses, zinc sheet, jute goods, polyester yarn and cardamom fetched over a billion rupees to make up almost half of the total export earnings in the first eight months of the current fiscal year.

“However, single market concentration is more vulnerable to international trade than product concentration,” said trade expert Ratnakar Adhikari. Product diversification is also necessary to mitigate the risk but the current international trade of the country is more vulnerable due to single market concentration on India, he said, adding that Nepal’s current export to India stands at around 70 per cent of the total exports.

“In the first eight months of the current fiscal year, exports to India alone stood at Rs 32.59 billion and exports to other countries stood at Rs 15.96 billion making a total of Rs 48.56 billion worth of exports,” according to the central bank data.

Exports to India went up by 14.5 per cent as compared to an increase of 10.1 per cent in the same period of the previous fiscal year and exports to other countries increased by 13.5 per cent against a decrease of 1.7 per cent in the same period of the last fiscal year.

Exports of textiles, polyester yarn, GI pipe, stone and sand, and cardamom contributed to an increase in export to India, whereas woollen carpets, readymade garments, pashmina, Nepali paper and paper products, and tanned skin contributed to the increase in exports to other countries.

However, merchandise imports also increased by 16.6 per cent to Rs 295.24 billion, against an increase of 1.2 per cent to Rs 253.13 billion in the same period of the last fiscal year.

On the import side, the country has a more dismal scenario as the total export receipt of Rs 48.56 billion is not enough to pay for a single petroleum product import bill as the country has imported petroleum products worth Rs 58.01 billion in the first eight months of current fiscal year.

“Similarly, trade deficit with India increased by 11.5 per cent as compared to a growth of 28.2 per cent in the same period of the last fiscal, whereas trade deficit with other countries was up by 28.9 per cent against a drop of 30.9 per cent in the same period of last year,” the central bank said, adding that an increase in import growth led to a reduction in the export to import ratio to 16.4 per cent from 16.8 per cent a year ago. “The total trade deficit has gone up by 17.1 per cent to Rs 246.68 billion.”

Top five exports to third countries

• Woolen carpets Rs 4.60 billion

• Readymade garments Rs 3.06 billion

• Pashmina Rs 2.08 billion

• Pulses Rs 1.40 billion

• Tanned skin Rs 429.7 million 

Source: THT