Print Edition - 2014-09-03 | MONEY
Footwear industry hit by raw material shortage
Sep 2, 2014-
Nepal’s domestic footwear industry has been confronted with a raw material shortage due to the blockage of the Araniko Highway which links Kathmandu with the Chinese border. Imports of raw materials from China have been halted since a landslide buried part of the highway at Jure a month ago.
About half of the raw materials used by the domestic footwear industry come from China, and the Araniko Highway is the main route for shipments, said industry sources.
Footwear manufacturers said that they had not been able to produce enough stock for the Dashain-Tihar festive season which accounts for 30-35 percent of their annual sales. According to traders, raw materials like rexene, PVC sole, nylon net, rubber, elastic, lace and chemical items are imported from China.
“Around 80 percent of the raw materials used to make shoes are imported from the international market with 50 percent of them coming from China. Our supplies have been cut off as the highway is out of operation and this has hit the industry hard,” said Homnath Upadhyay, president of the Nepal Leather Footwear and Goods Manufacturers Association.
According to the association, the domestic footwear industry produces shoes valued at Rs 10 billion annually. Upadhyay said that the domestic footwear industry could suffer a downturn if the halt in the supply of raw materials continues.
Although some companies have been manufacturing shoes using raw materials in stock, a number of small factories have closed down.
“We have been making shoes using our stocks. If the highway is not reopened within a week, we will have to close down the factory,” said Ram Krishna Prasai, managing director of Shikhar Shoes. He added that they were already facing a shortage of soles and nets.
Similarly, Raj Kumar Shrestha, director of Smart Shoes, said they had cut production by 25 percent due to lack of raw materials. “We are manufacturing around 200 pairs of shoes daily compared to our normal output of 250 pairs,” he said.
Meanwhile, traders have accused the government of not doing enough to reopen the highway. “It has been more than a month since the highway was blocked, but the government has not been actively engaged in reopening it,” said Pramesh Bisunkhe, chairman of Coral Shoes. “The Nepali footwear industry has not only been pushing out imported shoes from the domestic market but also establishing a presence in the international market.
According to the association, domestic footwear has a 65 percent share of the market in the country.
Published: 03-09-2014 09:33