Kathmandu University School of Management

Balkumari, Lalitpur

Assignment

NTIS-2016

IB and Trade

Submitted By:

Khusbu Agrawal

Roll Number: 18706

Section: C

BBA Year III

Submitted To:

Mr. Sunanda Regmi

Faculty of IB and Trade

KUSOM

Date: January 20, 2021

Background of NTIS

The countries that are open to trade are more prosperous than the countries that restrict activities
of trade. Trade has been an integral part of economies across the globe. The government of
Nepal have also engaged in formulation of trade policies in order to enhance country’s trade
performance, promote exports to achieve sustainable economic growth, poverty reduction and
inclusive economic growth. The Nepal Trade Integration Strategy (NTIS) 2010 is one of such
policies developed by Nepal government to stress on the need of development of Nepal’s trade
competitiveness and trade diversification as an updated version of Nepal Trade and
Competitiveness Study (NTCS) 2004. The NTIS was prepared with the support of UNDP, the
Government of Finland, the Department for International Development (DFID), the International
Finance Corporation (IFC), and the International Trade Centre (ITC), Geneva. Private sector
organizations and academia were also involved in its preparation.

However, due to the poor implementation of policy, unsatisfactory results of NTIS 2010, mainly
because of partial execution of recommended Actions, especially in the area of product
development, Nepal Trade Integration Strategy (NTIS) 2016 was formulated as third generation
trade integration strategy. The updated strategy is in line with GoN’s Trade Policy 2015 that sets
concrete goals to promote economic growth including improving business and investment
climate, enhancing competitiveness of Nepali products and reducing trade deficit. The strategy
aims to enhance the export competitiveness, resolve supply capacity constraints, promote trade
facilitation and address protracted constraints in cross- cutting areas such as trade and
transportation facilities, intellectual property rights, issues related to trade in services and so
forth.

Moreover, various challenges and constraints are faced by Nepal’s trade sector such as delays in
revising or adopting necessary Acts and rules, the absence of an integrated multi-modal transport
plan, lacks comprehensive architecture for mobilizing resources, lacks sufficient investment in
modern technologies for processing of priority export potentials and so on. In order to address
these challenges and constraints NTIS 2016 identifies Actions organized under 19 strategic
Outcomes. The Ministry of Commerce is responsible for monitoring the implementation of NTIS
2016 and share the findings. In order to ensure strong national ownership for effective
implementation, the Government of Nepal is committed to building on the mechanisms in place
to implement NTIS 2010 and those set up to assist with the formulation of NTIS 2016.

Objectives of NTIS

The NTIS 2016 aims at achieving the following objectives:

• To reinforce trade and exchange empowering environment

• To focus on product production and improvement of the supply capability of priority

items

• To fortify operational capacity, trade negotiation and collaboration between agencies.

• To build and emphasize on trade- related infrastructures.

Elaborate on the list of products and services identified in NTIS for special treatment

The NTIS 2016 is imbedded with actions and measures in nineteen strategic areas, covering
seven cross- cutting and twelve product- specific sub- sectors. The list of product and services is
given below along with the SWOT analysis of each products and services.

1. Large cardamom
Strengths
Cardamom being one of the largest produced
and high valued agro product has high
potential of export. The suitable geographical
and climatic conditions in Nepal is one of the
benefits for exporters.
Weaknesses
However, weak linkages and inadequate
specialized manpower along with inadequate
supply of improved seeds are some of the
shortcomings for export. The inefficient
facilities for internal quarantine is one of the
greatest weakness.

Opportunities
There is a possibility of productivity
enhancement through expansion of
production area and development of disease-
free seedlings. Likewise, there is higher
demand for the product in the third countries.
Threats
It is however a challenge to manage the
pricing mechanisms, deal with climate change
and diseases.

2. Ginger
Strengths Weaknesses

Nepal is the 4th largest producer of high-
quality ginger in the world. The favorable
geo- climatic condition has made ginger a
source of income and employment for small
farmers.
Some of the weaknesses are inadequate
quality seeds, limited storage, shortage of
skilled human resources, laboratories, high
diseases and so forth.
Opportunities
Due to the increase in global demand for
ginger in Ayurvedic medicines, richness in oil
and other sectors, Ginger export has great
prospect.
3. Tea
Strengths
Nepal has climate and unique geography
suitable for tea cultivation along with
supportive policy of government and
functional farmer cooperatives. The strong tea
associations and related organizations with
capacity of lobby are the factors that
strengthen tea export.
Opportunities
The tea export has high possibility of
employment creation, production area
expansion, development of brand value and
product diversification. Increasing global
demand for Nepalese tea has scope for
expanding.
Threats
However, high price fluctuations,
competition, loss of market share and lack of
pest control can be considered as threats to
this product.
Weaknesses
Since we have ineffective marketing policies,
lack of brand identity. Inadequate transparent
mechanisms, limited technical schools and
training, the process of export can face
several issues.
Threats
Additionally, competition with neighboring
nations, price volatility, problems due to
labour unions, dependency on a single
market, etc. are some of the risk factors.
 4. Medicinal and Aromatic Plants (MAPs)
Strengths
The exports of MAPs can be a great source of
employment and income as there is a huge
variety of MAPs found in Himalayan region
of Nepal. Likewise, large number of studies
are done on potential as well as benefits in all
stages.
Opportunities
The export of MAPs has high potential for
expansion and expansion of world market for
organic herbs. There is an opportunity to
capture great share of value and improve
collection and storage facilities.
5. All fabrics, textile, yam and rope
Strengths
We have good relationships with importing
countries along with good quality equipment
and machinery, making it beneficial to export. diversification, lengthy customs procedures
Likewise, high quality products and
competitive labour available here are
advantageous.
Weaknesses
The lack of policies, storage, processing
facilities, incomplete legal frameworks,
inadequate pest risk analysis and so on are
some of the shortcomings of this sector. Very
few products currently under cultivation, also
the absence of facilities for storage and
distribution are some other weaknesses.
Threats
Some of the challenges faced are lack of
knowledge, unsustainable harvesting, weak
Intellectual Property protection. Moreover,
lack of awareness of the methods of
sustainable selection is also a risk factor.
Weaknesses
Not to mention, insufficient storage, irregular
supply of electricity, lack of market
are some of the issues that can hinder the
trade of these products.
Opportunities
There is a huge scope for fabric and textile
industry as international markets are growing
and new markets with low tariffs are
emerging for Nepal.
6. Leather
Strengths
Leather being accepted in the world due to its
unique features and the growing market for
leather articles is a positive sign for traders.
Likewise, there is capability of producing
high quality exportable leather in Nepal.
Opportunities
There are opportunities for substantial job
growth. Potential for growth in the leather
tanning industry's capacity utilization.
Likewise, growing demand in the
international market and high demand for wet
blue leather in market has raised the potential
of leather trade higher.
Threats
One of the major challenges is lack of jute
products in Indian market and falling jute
production in the country.
Weaknesses
Due to the weak management of raw material
collection, poor supply chain, weak
institutional capacity the trade of leather can
be difficult. The industry lacks poor technical
know-how to produce quality finished leather
along with customs duty on the import of raw
hides and skins for processing in Nepal are
some of the challenging issues.
Threats
Some of the risk factor involve competition
from other countries with better quality
products and shortage of policies to mitigate
environmental impact.
 7. Footwear
Strengths
The low cost of labor, good quality of
product, high employment opportunity, labor
intensive nature, etc. are some of the factors
that strengthen the trade of footwear.
Likewise, Skill development opportunities for
the youth in short period of time and female
worker-friendly nature of the job are other
beneficial aspects.
Opportunities
The growing global and domestic market
along with expanding market utilization are
the prospects for further growth. Similarly,
there is growing awareness of inexpensive,
durable and good quality Nepalese footwear
among domestic consumers and simple access
to raw materials.
8. Chyangra Pashmina
Strengths
The low cost of labor, elevated prospects for
jobs, unique selling features due to traditional
production methods, ability to produce small
Weaknesses
The lack of investment in machinery and
equipment, shortage of facility center for
machines are the obstacles faced un the trade.
Furthermore, higher import tariffs on raw
materials are the weaknesses for footwear
industry.
Threats
The threats are strong reliance on imported
raw materials, shortage of skilled labor,
insufficient control over imported pirated
brands and competition with neighboring
countries due to price, quality, and volume
Weaknesses
However, shortage of silk production in
Nepal, bad foreign business networking,
shortage of yarn processing facilities in the
wool-producing regions are some of the major
orders for high value are some of the
strengths of pashmina trade.
Opportunities
There is a potential of expansion
opportunities in current and new markets. The
demand is growing and the capacity to
produce and export to new regions is also
increasing.
9. Knotted Carpets
Strengths
The major strengths are strong brand image
and socio- economic impact along with
worldwide appreciation. Furthermore,
customized production and no restriction on
minimum order quantity along with
availability of carpet design software in the
country itself are the strong points.
Opportunities
There is an emerging market in the Middle-
East and Asia with the establishment of a
problems. Likewise, lack of modern plants
and equipment for yarn dyeing hampers
product diversification, difficulties due to the
use of conventional technologies are the
weaknesses of the industry.
Threats
The major hurdles and challenges to
overcome are price competition with India
and China. Likewise, shortage of skilled
labour due to very large outmigration is
another issue.
Weaknesses
The low labor productivity, insufficient
market diversification, lack of systems for
quality testing and price fluctuation of inputs
imported are some of the weak points for the
carpet industry.
Threats
Some of the challenges and threats are
declining global demand, labour shortage,
collective trademark and significant room for misuse of Nepalese brand name by other
improvement in productivity of workers. countries.
There is also scope for niche market and
preferential market.

10. Skilled and Semi-skilled Professionals at Various Categories (Remittance-

generating Services)
Strengths Weaknesses

The low cost for the movement of remittances Some of the shortcomings are high cost of
and returnees bringing skills back to Nepal migration, high social cost for families with
have potential of entrepreneurship. Cost limited or no skills and poor support system
competitive nature of Nepalese human and incentive for migrant workers.
resource in the global market and high supply
of Nepalese human resources along with
poverty reduction through income generation
are some of the strengths.

Opportunities Threats

Training future migrant workers can improve
their skills, income potential and identify
employment opportunities are some of the
potentials. The current reputation of Nepalese
professionals is of a hard-working and
disciplined nature is also a benefit.
The shortage of workforce in the domestic
sector due to out- migration, low level of
investment, fall in oil prices and economic
slowdown might reduce demand and wages in
the Middle East.
 11. IT and BPO and IT Engineering
Strengths
Improved connectivity, English language
proficiency, demographic and significant cost
advantage of human resources are some of the for the sector in terms of target clientele and
beneficial factors.
Opportunities
The Increasing global demand for services in
IT and BPO along with Conducive regime for
foreign trade, including WTO waiver of
facilities for LDCs are the opportunities.
Furthermore, growing focus on trade by GoN
in service with rapidly evolving
telecommunications market, including the
competitive growth of broadband has
increased the prospects of service.
12. Tourism
Strengths
The abundance of natural and cultural
attractions, religious sites, World Heritage
sites, established image of cultural interest in
emerging markets, hospitable nature of
Nepalese are some of the strengths. Likewise,
government Priority for the development of
Weaknesses
Shortage of sources of electricity, insufficient
skill growth plan and lack of a cohesive plan
segment of the industry are some of the
obstacle points for the industry.
Threats
The challenges that are existing are unstable
labor relations and protests restrict the
capacity of the industry to scale up, limited
domestic opportunities for skilled workforce
and disruptive technological changes,
especially automation.
Weaknesses
The poor surface transport infrastructure and
limited road networks, limitation of supply of
utilities, lower quality of tourism services in
hotels, restaurants and others are the weak
points. The lack of capacity of the local travel
industry to penetrate directly into the
 sustainable tourism. Investment in tourism international market and absence of health
services and facilities is fairly mobilized by security codes for hygiene are some other
the private sector. issues.

Opportunities Threats

Emergence of the new segments such as The threats to the tourism industry comprises
Meeting Incentive Convention Event (MICE), issues such as competition from emerging
education, health wellness, meditation, regional destinations and unplanned
booming outbound market of neighboring development emerging regional destinations.
countries, establishment of airport, stability in
the country with enhanced safety and
strengthening inter-sectoral linkages proves to
be opportunity factors.

Thus, these are the 12 sectors that are selected as priority export potential sectors. Though each
of these products and services has high potential of growth and expansion in the market, there
are several threats and short comings that need to be taken care of. For such, proper
implementation of strategies and policies should be done. Moreover, I believe, necessary actions
such as legal and regulatory reforms along with quality recognitions should be taken to improve
the trade sector of Nepal.