INTRODUCTION
The contribution of industrial production in the gross domestic product (GDP) of Nepal in the last five year is 5.4 percent which is very discouraging. The total investment in industries of Nepal is Rs. 21 Kharba 26 Arba and 64 Karod. The share of large sized industries is the highest (i.e. 86.5 %) in terms of investment. The highest commitment of investment was made in the hydropower sector which was 59.7 percent in fiscal year (FY) 2077/78.
There are altogether 686 industries in 10 industrial estates and the government of Nepal (GoN) is planning to establish another 15 industrial estates in 7 provinces of the country. Similarly, GoN is planning to establish at least one Special Economic Zone (SEZ) in each province for facilitating export oriented industries. Currently, there are three SEZs which have already been established in three different cities of Nepal, namely Bhairahawa, Simara and Panchkhal.
Industrial products are essential for utilizing available resources, skills, and technology for employment creation and economic development of the country. The export volume of the country can increase if final goods (products) are exported instead of raw materials and intermediate items. There are some sectors which can be industrialized and similarly there are few sectors in which Nepal has comparative advantage. Agro based industries, non-timber based forest products, minerals, tourism industries, alternative and renewable energy, information and communication technology, small hydropower are the sectors which are considered to have comparative advantage. Therefore, export-oriented industries and import substitution industries should be given high priority and could also be developed in a public private partnership (PPP) model.
It is essential to invest in the industrial sector of Nepal not only to curb deficit in terms of trade (ToT) and to utilize local raw materials to increase industrial production but also to generate employment and to reduce rampant poverty.
Substituting imports by attracting domestic and foreign investments, promoting export through proper utilization of available raw materials and identifying potential areas of industrial investments where Nepal has comparative advantage, and study and analysis of those goods in which Nepal has comparative advantage etc have been the major concern of the nation. Therefore, a detail study is needed to identify gaps between production and demand and to make necessary policy reforms.
OBJECTIVES:
The overall objective of the study is to identify locations for industrial establishment (investment) in province/district/local level areas with comparative advantages and available raw materials. The specific objectives of the study are:
i. To identify raw materials which are used to produce industrial goods
ii. To identify industrial sectors which can be established in province, districts and local level
iii. To conduct comparative study of available raw materials and possible industries which can be established
iv. To prepare list of industrial sector and raw materials which have higher comparative advantage and present them province wise in digital manner
Findings:
1. Limestone occupies a total of 7,000 square kilometer of the total area of Nepal. 16 companies are currently producing cement clinkers using limestone from mines in Nepal. A total of forty-six locations of twenty different districts of limestone deposits has been identified in Nepal.
2. According to the research article “Mineral Resources, Mining and Investment Opportunities in Nepal”, (Ghimire et.al.),
a. Altogether 63 commodities have been identified with the categories of mineral showing, mineral occurrences, sub-economic and economic deposit
b. 21 commodities of the metallic mineral group
c. 23 commodities of chemical, fertilizer, insulator, ceramic, refractory and abrasive mineral group,
d. 6 commodities of the gem mineral group
e. 9 commodities of construction materials group and
f. commodities of fuel minerals and geothermal spring group
3. Jhapa, Morang, Sunsari, Ilam, Bhojpur, Khotang, Okhaldhunga are the major producers of Food Grains such as Paddy, Maize,Wheat, Millet and Barley according to 2075/76 study. There is also a market for large cardamom, ginger and garlic in this region. Also, Sunsari, Morang and Jhapa are majorly known for cash crop such as sugarcane, oilseed and potato production. This province is also rich in forestry. Medicinal and Aromatic Plants (MAPs) such a Chirayito (Swertia chirayita), Lauthsalla (Taxus wallichiana), Dhasingare (Gaultheria fragrantissima), Tejpat (Cinnamomum tamala), Rudraksha (Elaeocarpus sphaericus), f) Satuwa (paris polyphylla), Bojho (Acorus calamus), Mentha (Mentha spicata), Camomile are available in this Province. In this province, important minerals such as Copper, Lead, Iron, Zinc, Garnet, Graphics etc. are available.
4. Madesh Province is famous for production of food crops, pulses, spices and cash crops. Padddy, Maize, Whear, Millet, Barley and Buckwheat are the major food crops; Ginger and Garlic are the major spices produced in this region. Likewise, production of pulses such as lentil, chick pea, grass pea, pigeon pea and black gram are done here. Cash crop such as oil seed, sugarcane, potato and MAPs such as Kurilo (Asparagus racemosus), Amala (Phyllanthus emblica), Harro (Terminalia chebula), Barro (Terminalia billerica), Lemongrass (Cymbopogon citratus), Sikakai (Acacia concinna), and Musali (Chlorophytum borivillianum)are available here.
5. Bagmati Province: Paddy, Maize, Wheat Millet, Barley, Buckwheat. Highly produced in Chitwan, Makwanpur, Sindhuli. Large Cardamom, Ginger, Garlic. Likewise in other provinces, spices such as Garlic, Ginger and Large Cardamom are produced here. Majorly produced pulses are black grams and lentils. Oil seed, potato and sugarcane are also produced here. MAPs such as Sungadawal (Valeriana jatamansii), Pasanbhed (Berginia ciliata), Satuwa (Paris polyphylla), Salechuk (Hippophae salicifolia), Timur (Zanthoxylum armatum), and Dhuppi (Juniperus indica); and minerals like Copper, Iron, Lead, Zinc, Graphite, Magnesite, Mica, Silica Sand, Talc, Quartz, Ruby and Sapphire, Gravel and Sand, Limestone and Marble are available.
6. Gandaki province has the similar food crops as available in other provinces. Spices available in this region are Cardamom, Garlic, Turmeric, Ginger and Chili. Types of pulses and cash crops are similar as other regions. Some important mineral resources like Copper, Iron, Tourmaline, Gravel and Sand, and Limeston are available. Mustang and Manang of this Province are popular for Apple production.
7. Cash crops, food crops, pulses and spices available in Lumbini Province are quite similar to other provinces. MAPs like Tejpat (Cinnamomum tamala), Timur (Zanthoxylum armatum), Kaulo (Persea odoratissima), Sugandhakokila (Cinnamomum glaucescens), Mentha (Mentha spicata), Camomile, Bojho (Acorus calamus) are available here and minerals such as iron, gravel and sand are abailable here. Karnali province is the largest but the least populated province of Nepal which contributes nearly 4 percent to the national GDP. It has given special emphasis on organic agricultural production and promoted Karnali as an “Organic Province” by gradually replacing chemical fertilizer and pesticide with organic inputs and protecting organic agricultural lands. Cash crops, food crops, pulses and spices available in Karnali Province are quite similar to other provinces. MAPs such as Atis (Delphinium), Kutaki (Neopicrorhiza scrophularifolia), Timur (Zanthoxylum armatum), Kaulo (Persea odoratissima), Jatamasi (Nardostachys jatamansii), Dalechuk (Hippophae salicifolia), Dhupi (Juniperus indica) are available. It has also got some important minerals like Kyanite, Quartz, Tourmaline, Gravel and Sand, and Limestone. Jumla, Humla and Mugu are best known for apple production.
8. Sudurpaschim province alike other provinces has the similar food crops, spices, pulses and cash crops among others. The major MAPs of this province are Tejpat (Cinnamomum tamala), Kurilo (Asparagus racemosus), Ritha (Sapindus mukorossi), Setakchini (Polygonatum cirrhifolium), Dalechuk (Hippophae salicifolia), Dhupi (Juniperus indica), Mentha (Mentha spicata), Camomile, Bojho (Acorus calamus) and important minerals available here are Copper, Lead, Magnesite, Talc, Kyanite, Quartz, and Gravel-and-Sand.
9. Paddy has been playing a major role in Nepalese GDP and Lumbini Province contributes the major paddy production. In FY 2020/21, Nepal imported rice of NPR 50 billion. If paddy export can be stopped in time before reaching processing mills in Southern border of Nepal, Nepal may not need to import rice from other countries.
10. Among all the spices, production of ginger is very remarkable in Nepal. Province 1 is the top producer of ginger in Nepal. But farmers are forced to sell their products at lower price due to lack of storage facility. Experts argued that the government should provide farmers with support price of the product so that they can produce their product as much as they can.
11. Production of lentil is dominant among other pulses. As per recent data, pulses are being imported from other countries which is why their production should be increased to eliminate the possibility of import. Also the government should being necessary policy to preserve the cultivated land of the Terai region.
12. As regard to cash crops, we see the potential of sufficient production so if the current amount of production can be increased then we would not have to import them from other countries. Also, there are three major problems associated with sugarcane production such as bitter relationship between farmers and sugar producers, randomized process of determining sugarcane price and delayed payment for sugarcane suppliers.
13. Although there is the possibility of commercial and industrial production of 21 different types of essential oils, the actual data of export of MAPs and essential oils are not available. Also people need to take permission from various sectors causing issue in production, transportation, procession and export of MAPs.
CONCLUSIONS AND RECOMMENDATIONS
i. The government should develop policy to bring in Foreign Direct Investment so as to produce Copper, Garnet, Magnesite, Kyanite, Quartz, Tourmaline and Limestone instead of importing these minerals and their mining can be restarted again in the country.
ii. Import value of zinc and its articles is very high. So, DMG should focus on follow up with the licensed firms for the immediate exploration of these minerals in order to fulfil the demand in the country and if necessary, should issue additional licenses to other private firms.
iii. Mineral resources play a vital role in industrial development and providing job opportunities to many but it should be noted that the mining activities should be done with lowest possible damage of the existing natural environment applying appropriate method and technology.
iv. In fiscal year 2020/21, the contribution of agriculture, industry and service sectors to the growth of GDP (at basic prices) is estimated to be 20.2 percent, 19.6 percent and 60.2 percent, respectively (Economic Survey 2020/21). Among these sectors, the manufacturing sector offers special opportunities for capital accumulation in any country and contributes to economic growth rate.
v. Moreover, in addition to above sectors, Nepal’s atmosphere is quite suitable for mango in Terai region; orange, kiwi fruits, tea-coffee in mid-hills region and apple in High-hill and Himalayan region. If proper road networks and modern farming knowledge, technology and support are provided to the farmers, commercialization of the product can yield high profit.
