TRIBHUVAN UNIVERSITY Faculty of Management

NEPAL COMMERCE CAMPUS

MINBHAWAN, KATHMANDU

A study report on Handicraft Association Nepal And It's role in Export

Submitted by: Bishal Chandra Kafle Tula Raj Shahi

Submitted to: Mr. Prakash Paudel Marketing Department

Acknowledgement
We extend our sincere thanks and heartfelt gratitude to our research supervisor Mr. Prakash Poudel, Lecturer, Nepal Commerce Campus for assigning us this project. We express our gratitude to all the friends of Marketing Specialisation, Nepal Commerce Campus. Lastly, we would like to thank all the personnels who helped and encouraged us directly and indirectly to carry out this study into success. We are very thankful to all of them.

Table of Contents
Title Page No.

1.Defination........3 2.Historical background.........3 3.Major Handicrafts........6 4.Federation of Handicraft Association of Nepal .....8 4.1 Aim and objective..8 4.2 Functions8

5. Export procedure.9 6. Handicraft export data comparision....10 7. Problems of Handicraft in Nepal..12 8.Recommendations..12 9.Conclusion.13 10. Bibliography...14

Definition:
The statute of Handicraft Association of Nepal (HAN) in its article 1.4 (i) has defined "handicraft industry" as "an industry that manufactures a product reflecting the country's tradition, art and culture, and/or uses labor intensive specialized skills, and/or uses indigenous raw material and/or resources"

Historical background:
The historical development of Nepalese craft and cottage industry, though very old, is full of ups and down. A reference is found in Kautilya's Economics about various production and export from Nepal. During the time of Chandra Gupta Mouriya in forth century there was considerable trade in blanket of wool, Nepal was mentioned as a source of good blankets. It was rainproof blanket made of eight pieces joined together of black color known as "bhiringisi" as well as "apasaraka". In the same way it was mentioned in the epics of Jain religion "Brihatakalpasutra Vhashya" that good quality of woolen blanket were available in Nepal. Various famous Chinese travellers (Wangunshe and Huansang 648 A.D.) had highly appreciated many skills of Nepalese craftsmen and artisans in travelogues. Right from the very beginning up to the mid nineteenth century the rulers of the country to promote national industries and trade did adopt various measures of production, promotion and encouragement. To save national industries, only those commodities were imported which were not produced locally. Towards the end of the nineteenth century Nepalese arts and crafts in particular the entire home based industries in general suffered a lot due to the general liberal import policy of the government. Before British could establish their regime over India and entered in to place treaty with Tibet in 1904 A.D. Nepal was interpret and the main route for Tibet, external trade with other countries. But the treaty os 1904 A.D. facilitated the Britishers to open a new route between India and Tibet through Chumbic Valley plus the trade route treaty of 1923 A.D. between Nepal and British India, which was not in favour of Nepal and had very unfavorable effects both on industries and on flourishing trade of the country. But the unusual demand for all consumer goods prior to and during the World Was IInd provided a respite to the dying Nepalese industries. Moreover the government of the day realized the necessity of some and, eans to promote industries in Nepal. As a result of the realization, "Industrial Council" was set up in 1935 A.D. Later on "Nepalese Cloth and cooage Industries Publicity Office" was established in 1939 A.D. As it is clear from its name, the office was the only government effort for promoting cottage industries. Besides the government efforts there were some individual "Gandhin Social Workers" who regarded spinning & weaving as potential weapon to flight against dehumanizing poverty of the masses and Rana's dictatorship. Tulsi Meher tops the list of such people. He is the man who also got the "Nehru Purushkar" of the year i.e. 1978 A.D. For the first time, it was advocated to executive spinning and weaving as composite work and not separates.
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Kautilya spoke in praise of all Nepalese home made goods including handloom products. Weaving is practiced by all most all communities of the hills and valleys e.g. newars, gurungs, magar, bhote, Sherpa, rai, limbu and tharu of Tarai. Kerk Patrick who came to visit Nepal in 1793 A.D. wrote in his book, "An Account of the Kingdom of Nepal", the newars are expert in cottage industries. As far as cloth is concerned, they make rough course kind of it partly for use and partly for export. The cotton needed for it is produced in Nuwakot of Madhesh. Thus even as late as 1816 A.D. Nepal was not only self sufficient in her requirement of cloths, but had surplus for export also. Thus up to the end of 19th century, Nepalese people were self sufficient to meet the requirement of cloth through the production of handloom which was flourishing and promising cottage and small scale industry of Nepal at that time. After the treaty of Sugafuli in 1918 A.D. with the British, the door for open trade between Nepal and India was thrown wide open. Indian goods mass produced in factories and goods similarly produced in other countries had free occurs into Nepal, which cause a great suffer to the indigenous industries of our country. Thus cottage and village industry of country went on determining day by day.

Major Handicrafts:

Products Bags & Accessories Basketry Products Ceramics

Description Purses, hand bag, travel bag and the like made from cloth and Leather Various types of products made from bamboo and cane split, stem or root. Glazed and non glazed Earthenware

Christmas Decorations Ornaments products meant for decorating Christmas tree made from textile, metal and clay. Contemporary Paintings Craft Paintings Crazy/ Fancy Hats Ethnic Dolls Ethnic Garments Filigree Products Paintings using sketch and colors on canvas and other materials Paintings using wheat/ rice bran/ stem, waste thread and other materials. Hats with symbolic impression like flags, animals and other specially meant for big sporting events. Dolls & Puppets of Nepalese culture made of cloth, clay and wood. Garments of traditional design. Decorative articles such as animals, charm boxes made of brass, copper, white metal and silver with wire works and studded with stones. Small items made from different materials basically useful for offering gift. Articles made of hand - knitting such as pullovers, sweaters, mufflers, socks, legwarmers, caps Cotton cloth woven with non-mechanized handlooms. Products made of Lokta (Daphne Papyracea of thymalaeceae family) such as stationary, lampshade, wall paper, wrapping paper, bag, gift items etc. Bed covers, bed linens and the like using block/ screen printing, Embroidery, crochet and similar skills. Buttons, cufflinks and other decorative articles Various circular & square type elongated boxes made copper, brass and other metals used for storing incenses Products made of goat skin and water buffalo leather
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Giftware Hand Knitwear Handloom Products Handmade paper Products Home Furnishing Horn & Bone Products Incense

Leather Goods

Macram (Knot craft) Knot craft Products Metal craft (Statue) Icons based on Buddhism and Hinduism, made of coppers, bronze, silver and gold as basic raw materials with chisel works. Utensils and garden articles made through hammering and casting such as flower vas, singing bowl, bell, cymbals, wine jars, cups and so on. Buttons made from small tree branch, stone, bone and horn.

Metal craft (Utensil)

Natural Buttons

Natural Fiber Products Apparel and non-apparel products made from hemp, nettle and similar indigenous plants. Pashmina Goods Paubha (Thanka) Puzzles & Toys Religious Goods Silver Jewelry Articles made of pashmina (fine goat hair) such as shawls, mufflers, sweaters Sacred scroll paintings on cloth/ paper, based on Buddhist and Hindu religious scriptures. Wooden toys and puzzles for growing children. Bell, Vajra and other different objects, items used for religious ceremony of Buddhism and Hinduism. With / Without semi-precious stones such as earring, ring, bracelet, pendent, bangles with minimum of 92.5% purity. Statues, decorative and utility products made of stones. Products made of various types of wood such as door panels, figures of gods & goddesses, replicas of famous windows, imitations of temples/ monuments and many decorative/ utility articles, with hand carving.

Stone Carving Wood carving

Federation of Handicraft Associations of Nepal:

Federation of Handicraft Associations of Nepal was established in 1972 to enhance and promote handicraft trade and industry. Originally, its name was Handicraft Association of Nepal (HAN). It is registered under Institution Registration Act of Nepal. It is a service oriented non-profit organization of private sector business and artisan community. It helps its members to improve their productivity, explore markets and introduce them to the international arena. It also works as liaison between its members and the Government and Non-Government Organizations.

Aims & Objectives:

1. To work towards steady growth of handicraft trade and industry.

2. To encourage Nepalese artisans to adopt handicraft production as their profession by preserving Nepalese cultural heritage and to popularize it in the World. 3. To strive towards enhancing the quality of handicraft goods & its productivity.

4. To provide pragmatic suggestions and advice to His Majestys Government and its related agencies to formulate policy/programs for the betterment of handicraft trade & industry. 5. To popularize & promote handicraft products.

Functions:
1. Organize seminars, symposiums and conferences on various topics relevant to strengthening the handicraft trade & industry. 2. Organize exhibition and trade fairs to highlight handicraft products & create public awareness in its usage. 3. Activate and increase contacts with National and International Agencies for the growth of handicraft trade & industry. 4. Explore additional markets for the handicraft products. 5. Institute award in recognition of highest export and best craftsmanship. 6. Arrange participation in international trade fairs & exhibitions for its members. 7. Publication of news bulletins, books, catalogues, members directory and other materials relevant to promote handicraft trade & industry. 8. Act as catalytic agent for management of training programmes for the benefit of its members. 9. Documentation & dissemination of information regarding handicraft trade & industry.
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Export Procedure:
I. An export should have : 1. Registration of Firm/Company/Industry 2. Registration in local Inland Revenue office 3. Current account with a commercial bank

II. An export order could be affected a. If a letter of credit is opened on the exporter's name or b. Advanced payment is deposited, in convertible currency, in the exporter's bank account, or c. Samples, up to the value of US$150 could be exported without the conditions stated on II a and b d. Some product could be exported without fulfilling the conditions stated in II a and b. Similarly, export to India and Tibet enjoy waiver of the conditions in II a and b.

III. Documents required for export 1. Commercial Invoice certified by Federation of Handicraft Associations of Nepal along with a certificate. 2. Packing List (if applicable) 3. Certificate of origin issued by local Chamber of Commerce 4. Nepal Rastra Bank declaration form 5. Advance payment or Letter of Credit 6. Letter of Authorization 7. A copy of firm registration/ Income tax (Permanent Account Number) registration - once a year 8. A copy of custom agent registration if an agent is appointed 9. *Museum Pass Certificate (Department of Archeology) 10. *GSP form A 11. *No objection letter from Federation of Handicraft Associations of Nepal for products made from the parts domestic animals 12. *Recommendation letter from Department of Mines for some mineral products 13. *Recommendation letter from Department of Forestry for some forestry based products.

* Applicable for selected products/ countries only.

6 Month's Comparision Data of Handicraft Goods Exported

Fiscal Year 2067/068 and 2068/069 (2010/11and 2011/12)
Month : (ShrawanPaush)
(Amount in Nrs.) S.N. A 1 2 3 4 5 6 7 8 9 Description Textile Products : Pashmina Products Woollen Goods Felt Products Silk Products Cotton Goods Hemp Goods Allo Goods Dhaka Products Misc.Textile Products Sub Total : Non Textile Products : Silver Jewellery Metal Craft Handmade Paper Products Wood Craft Plastic Items Ceramics Products Leather Goods Bone & Horn Products Glass Products 181,372,167 294,187,192 143,855,496 34,217,119 3,971,142 15,843,018 5,442,243 14,776,894 21,712,879 110,954,574 446,549,381 227,071,875 40,378,563 4,351,434 17,655,824 7,330,262 27,417,265 (38.82) 51.79 57.85 18.01 9.58 11.44 34.69 85.54 311.54 5.32 21.39 10.88 1.93 0.21 0.85 0.35 1.31 4.28 194,683,725 276,568,153 165,669,916 38,642,678 44,346,828 7,903,261 562,379 1,568,128 5,717,598 735,662,666 172,777,192 421,987,836 227,839,364 108,765,301 81,769,109 12,732,597 1,357,209 994,193 7,362,108 1,035,584,909 (11.25) 52.58 37.53 181.46 84.39 61.11 141.33 (36.60) 28.76 40.77 8.28 20.22 10.92 5.21 3.92 0.61 0.07 0.05 0.35 49.61 6 Month F/Y 2067/68 F/Y 2068/69 Increase /Decrease of Export (%) Contribution to Total Export (%)

B 1 2 3 4 5 6 7 8 9

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89,357,647 10 11 12 13 14 15 16 Incense Paubha (Thanka) Beads Items Stone Craft Bamboo Products Crystal Products Miscellaneous Goods Sub Total : Grand Total 7,653,299 4,125,120 5,071,250 1,520,838 1,469,526 4,005,628 19,727,666 758,951,478 1,494,614,143 13,969,862 8,636,410 17,181,637 4,566,582 623,036 1,644,336 34,086,422 1,051,775,108 2,087,360,017 82.53 109.36 238.80 200.27 (57.60) (58.95) 72.78 38.58 39.66 0.67 0.41 0.82 0.22 0.03 0.08 1.63 50.39 100.00

Misc. Textile Products include products made from Rayon, Polyester, Velvet and Jute Miscellaneous Goods include goods/products other than classified above Increase/Decrease of Export is based on export of each handicraft goods comparing to previous year Contribution to Total Export is based on share of each products to total export of handicraft goods in F/Y 2068/69
Source: Federation of Handicraft Associations of Nepal, Thapathali Height, Tel:4244231,4245467, 4243015 Fax:4222940 Email: han@wlink.com.np, URL:www.nepalhandicraft.org.np

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Problems of Handicraft in Nepal:

1. Unavailability of necessary and sufficient raw materials 2. Over costing and instability in the cost of raw materials 3. Shortage of gold, silver and electricity 4. Lack of a Cadmium testing lab 5. Do not have the capacity to accept bulk orders placed by importers in India 6. Lack of Promotion 7. Late Delivery 8. Labour-Relation Problem 9. Lack of potential market search

Recommendations:
1. Make the raw materials domestically available (Start producing locally) 2. Stabilize raw material process by building warehouses, doing forward contracts etc. 3. Prepare perquisites of development. 4. Government should provide subsidy to allow entrepreneurs to compete at international level. 5. Ensuring proper promotion, tactful lobby with foreign counterparts (viz. Trade Promotion Centers, Chamber of commerce, Export Promotion Centre, Internet advertising, Trade shows etc.) 7. Ensure right time delivery; hire best shipping company, prolong the delivery time while preparing L/C. 8. Equip industry with the sufficient requirements i.e. built out research labs, test labs etc. 9. Settle the labor related problems politically, develop a disciplined culture. 10. Do intensive marketing research to explore the new market demands.
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Conclusion:
Handicraft industry is a major industry in Nepal which has a lot of share in Nepalese Export. It has been contributing a lot for Nepalese GNP. It has various classifications through which it is being able to cater to the needs of various markets worldwide. It is providing unique and quality product exports. It is contributing a lot to the Nepalese market by creating a lot of employment oppurtunities. It has potentials for expansion. So, the government should increase its investment and focus in promoting Nepalese handicrafts worldwide. Furthermore, subsidy should be provided to Nepalese entrepreneurs so that they can compete at international level.

(Mail us the feedback at bishalckafle@gmail.com)

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Bibliography:
www.wikipedia.com www.myrepublica.com www.nepalnews.com www.nepalexport.org.np
handicraftwork.blogspot.com/2010/07/recommendation.html www.nepalhandicraft.org.np

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