Global apparel brands stall Nepal's investment plans due to political instability and economic uncertainty. The recent violent protests by Gen Z activists have raised security concerns, causing international and Indian clothing brands to pause their expansion into Nepal. Pashupati Dev Pandey, president of the Garment Association of Nepal, highlights the dilemma faced by potential investors. The protests led to the burning of luxury hotels, including the Hilton and Hyatt, which has further deterred investment. The ongoing trade negotiations between India and the US could significantly impact Nepal's prospects. If the negotiations result in reduced tariffs, international brands might opt for other markets, as Indian media suggests. This is a crucial moment for Nepal's apparel industry, as it was previously seen as an attractive alternative to India due to lower tariffs. The US tariffs, imposed in response to India's purchases of Russian oil, have already affected Indian exports, causing a 20% drop in September and nearly 40% decline over four months. Nepal's garment exports have also suffered, with a 10.22% decrease in the first three months of the current fiscal year. However, Nepali manufacturers remain optimistic, anticipating a potential shift in US buyers' preferences if tariff negotiations fail. The industry is also addressing transhipment concerns, as the US has strict penalties for this practice, which could impact Nepal's legal framework. Additionally, Indian gold jewelry producers are showing interest in the Nepali market post-tariff hike, with preliminary inquiries from Indian jewelry makers. Nepal's silver and gold jewelry exports have seen growth in the current fiscal year, indicating a positive trajectory despite the challenges.
