weighted score 3.7 · ten dimensions
Sourcing Attractiveness Index · ten dimensions
Nepal
Labour cost, supply base depth, logistics infrastructure, trade access, and quality scores for Nepal as a sourcing destination.
Labour cost competitiveness
9
Among the cheapest labour in South Asia. Manufacturing wages well below USD 100/month. Highly competitive for labour-intensive categories.
Supply base depth
3
Narrow supply base concentrated in garments, carpets, and pashmina. Very limited industrial diversification. No complex manufacturing ecosystem.
Logistics & infrastructure
2
Landlocked — fully dependent on Indian ports. Border congestion and transit delays add significant cost and time. Weak domestic road and power infrastructure.
Workforce skills
4
Good English proficiency for the region. Literacy at 68%. Skilled labour constrained by emigration — remittances exceed 25% of GDP.
Scalability
6
Small economy with limited industrial capacity, but low base means moderate room for growth in niche labour-intensive categories.
Ease of doing business
2
Bureaucratic complexity, frequent government changes, and weak regulatory infrastructure. Foreign investment framework underdeveloped.
Trade access & tariffs
2
EU EBA duty-free access is a significant advantage. Limited FTA network otherwise. Landlocked transit adds effective trade cost.
Sustainability baseline
2
Limited environmental regulation and enforcement. Hydropower potential exists but power supply remains unreliable. ESG audit infrastructure minimal.
Innovation & IP
4
Very low R&D investment. No significant patent activity. Traditional craftsmanship (carpets, pashmina) represents the primary knowledge base.
Quality standards
3
GoodWeave certification well-established for hand-knotted carpets. Beyond carpets, quality management systems and third-party audit infrastructure are limited.
Labour & Cost Competitiveness
Labour & Cost Competitiveness
- Wage level
- Nepal has among the cheapest labour costs in South Asia. Minimum wages for manufacturing workers remain well below USD 100/month, making it cost-competitive for labour-intensive production such as garments and hand-knotted carpets.
- Workforce profile
- Population of approximately 30 million. English proficiency is relatively good for South Asia, though literacy stands at around 68%. Skilled labour availability is limited by emigration — remittances account for over 25% of GDP.
- Key export categories
- Garments, hand-knotted carpets, pashmina products, and tea are the primary export categories. These are low-complexity, labour-intensive products suited to Nepal's cost structure.
Infrastructure & Market Access
Infrastructure & Market Access
- Landlocked logistics
- Nepal is landlocked and depends entirely on Indian ports (primarily Kolkata and Visakhapatnam) for sea freight. Transit delays, border congestion at Birgunj-Raxaul, and dependence on Indian road and rail infrastructure add cost and time to supply chains.
- EU trade access
- Nepal benefits from EU Everything But Arms (EBA) preferences, granting duty-free, quota-free access for all products except arms. This is a significant cost advantage for garment and textile exports to the EU market.
- Scalability constraints
- Small domestic market, limited industrial zones, and weak power infrastructure constrain the ability to scale manufacturing rapidly. Nepal is better suited as a niche sourcing origin than a volume alternative.