In recent months, a growing number of Pashmina shawl producers and exporters in India have started offering international buyers prices that are over 30 percent cheaper than Nepali rates in a bid to lure them away, said Nepali exporters.
“Worse still for us, they have started to snatch away our traditional buyers,” Pushpa Man Shrestha, president of Nepal Pashmina Industries Association (NPIA), told Republica.
“In a recent talk with me, Italian importers who have bought from me for a long time complained that our pashmina products were more expensive than Indian pashmina by over 30 percent,” he stated. Shrestha elaborated that he is under severe pressure to cut costs. If costs do not decrease, he knows he will not be able to retain buyers, and his exports will be in a new downward spiral.
Shrestha is not alone in facing such grim prospects.
Other exporters said they also have started getting similar complaints from overseas buyers. Some said their buyers have started placing orders in India and others expressed fears they will soon lose their traditional buyers owing to the huge price difference.
“Thriving Pashmina factories in India have not only threatened our overseas markets, but also squeezed the market within India itself,” said NPIA´s Shrestha. India has been an important market for Nepali pashmina products for the past one and half decades.
Entrepreneurs said the increasing production capacity of India and a rising number of pashmina producers offering similar quality at lower prices has emerged as the biggest ever challenge faced by the Nepali industry.
“This can have a devastating impact,” said Shrestha, expressing fears that Nepali entrepreneurs would simply not be able to retain their international markets if they fail to reduce cost of production and increase value addition.
Fresh export data also shows a double-digit decline in the export of pashmina from Nepal.
According to Trade and Export Promotion Center (TEPC) data, the export of Nepali chyangra (mountain goat) pashmina shawls dropped by 17.5 percent during the first quarter of fiscal year 2012/13, compared to the same period last year, despite international promotional efforts by entrepreneurs.
Nepal´s pashmina export during the period stood at Rs 519.35 million, whereas the corresponding figure for the first quarter last year was Rs 629.25 million.
However, Shrestha said the seasonal demand for pashmina for the upcoming Christmas and New Year has not gone down.
With the introduction of a collective trade mark for Nepali chyangra pashmina a couple of years back, Nepali producers and exporters had expected that exports would jump in the international market.
In an effort to promote the export of pashmina shawls overseas, the government has included pashmina in the list of highly prioritized products under its Nepal Trade Integration Strategy (NTIS) - a policy document that focuses on the promotion of exports of high export potential.
International Trade Center (ITC), joint the joint agency of the World Trade Organization (WTO) and the United Nations, has also agreed to extend support worth Rs 170 million to promote pashmina through increased production, quality processing and higher exports.
The support is aimed at strengthening the competitiveness of chyangra pashmina by establishing backward linkages with the value-chain among chyangra farmers, wool processors and exporters, along with forward linkages including promotional activities such as publicity for the trade mark, international marketing and advertising in global media.
The ITC has been supporting least developed countries in product development and production promotion to strengthen their supply capacity.
“We expect that with ITC support we will be able to expand our market in the long run,” said Shrestha.