Kathmandu. Lack of skilled human resources and lack of suitable market for raw materials and manufactured goods are the major problems in the country’s industrial sector.

According to a study conducted by Nepal Rastra Bank, lack of adequate capital, high cost of production, technological backwardness, lack of full capacity, migration of human resources, management and operation of eco-friendly industries have also been taken as challenges.

According to the study conducted by Nepal Rastra Bank, accelerating the construction of industrial infrastructure, increasing industrial production and productivity, proper management of raw materials, enhancing the competitive capacity of domestic production and diversification of export-oriented goods are some of the challenges in the industrial sector.

According to the ‘Half-yearly report of the current fiscal year’ recently released by the Central Bank, the industries established in Karnali Province are facing shortage of capital and lack of marketing. Preventing the migration of established industries and factories and managing the required technical skilled human resources in the industries have emerged as a challenge as a large number of youths go for foreign employment.

Attracting foreign investment on the basis of minimal industrial infrastructure and managing the capital required for the industry and managing the cost and quality of manufactured goods to make it competitive with imported goods is also taken as difficulties.

According to the study, the promotion of local production and industrial activities by controlling the possible customs evasion and illegal import that might occur due to the open border with India in the Far-Western Province is one of the challenges. Lack of skilled and technical manpower required for the operation of industries, weak infrastructure, lack of legalization of exportable goods, low productivity and weak export capacity are also some of the challenges.

High cost of production of domestic products, weak industrial infrastructure and lack of utilization of locally available natural resources are also some of the challenges. According to the study, there is significant potential in the country’s industrial sector. The study report states that the government has given priority to the expansion of hydropower production, construction of infrastructure development of special economic zone and industrial village.

There is immense potential for industrial development in the context of production of agricultural products, availability of herbs and mineral resources. Similarly, with the increasing use and use of information technology, there is a high possibility of developing software development, information technology services, and outsourcing industries.

There is also the possibility of expansion of industrial production due to the provision of use of domestically produced goods in the government bodies, policy provisions including government cooperation with the private sector, easy banking access, low interest rate, investment in banks and financial institutions, increasing urbanization and the use of digital technology.

According to the report, there is a possibility of expansion of agro-based industries, food processing, sugar industry, dairy industry, oil industry, rice industry and livestock feed industry as paddy, wheat, maize, sugarcane, oilseeds, vegetables, fruits and dairy production are abundant in Madhes Province. Various industries related to hotels, handicrafts, religious materials, Mithila art and tourism can be developed in Madhes Province, which is rich in religious, cultural and historical heritages.

According to the study, the contribution of the industrial sector to the GDP will increase by establishing industries in Madhes Province as it has the highest population density and the highest population of the country and the cheap labour supply is available.

Meat production, dairy products, food processing, herb processing and other small and medium industries can be established in Bagmati Province as there is ample potential for agro and livestock-based industries. In the context of high liquidity and low interest rates, industrial production and employment could be increased if an environment was created to utilize additional credit from banks and financial institutions.

Similarly, by making the maximum use of digital technology, the market of industrial products can be expanded and new products can be studied and researched. Production and employment can be increased by encouraging the operation of business according to the skills of Nepalis who have returned from abroad.

It would prepare a new base in the Gandaki state if the economic growth projects and the ‘Make in Nepal’ and ‘Made in Nepal’ campaigns are effectively implemented in the province as well as legal reforms for various industries, necessary roads, electricity, transmission line and internet services. Giving priority to the use of domestic production and encouraging domestic production in the use of necessary materials in government and non-government bodies, the domestic production will increase further.

The study has shown that export promotion and import substitution of industrial products can be done by emphasizing on industrial production based on agriculture sector and local resources and skills. The study has stressed on the need of increasing production and financial expansion by investing in the industry through the presence of banks and financial institutions, the status of deposits and low interest rates.