The direct impact of the Iran-Israel conflict in West Asia has begun to be seen in Nepal's ready-made garment industry. Industrialists say that the production cost of Nepali garments has increased by 10 to 15 percent due to the increase in the price of crude oil in the international market and disruptions in the supply chain.

As energy centers have become unstable due to the conflict, petroleum products and petrochemicals made from natural gas have become expensive. This has especially increased the price of raw materials such as nylon, acrylic and polyester, which are made from synthetic fibers.

On the other hand, the garment industry has started to be affected by not only the increase in the price of raw materials but also the delay in the delivery of goods from cargo freight and even the stoppage of finished goods. Not only the price of raw materials but also the cargo freight have increased drastically, said Sanjay Agrawal, founder and chairman of Heritage Fashion Industry, which has been in operation for 38 years. 

‘The transportation cost of raw materials coming from Thailand, Japan, India, China and Taiwan has increased,’ said Agrawal, ‘It now takes a week for goods that used to arrive in three days, and that too is not fixed.’ He said that the industrialists are now in a wait-and-see situation as they have not been able to send ready-made goods and have not received any new orders. ‘Our shipments are on hold, we have not been able to send ready-made goods,’ he said, ‘No new orders have come. We are in a wait-and-see situation.’

Agrawal, who is also selling clothes made in Nepal through another Nepal brand, said that there has been no immediate problem with the fabric as they work only with cotton. However, industrialists say that the prices of essential items for the garment industry, including threads, buttons, polythene bags, zippers, have also increased.

Kishor Nepal, president of the Nepal Local Ready-Made Garment Manufacturers Association, said that the cost of production within the country has increased by 15 percent. ‘Containers that used to arrive in 30-35 days are now taking two months,’ he said. He also said that the increase in container fare from $3,400 to $4,800 has put a huge financial burden on the industrialists. 

Nepal, which is also the operator of Kiroj Fashion, has added to the difficulties caused by the 15-day opening and 15-day closure system at Tatopani and Kerung, the main border points with China, due to road construction. He said that if perishable and perishable goods are given top priority, there will be delays in clearing goods from customs, including clothing.

Although a large amount of raw materials for garments come from various countries including China and India, the price of raw materials has also increased due to the increase in crude oil prices, he said.

He said that overall demand has decreased, goods cannot be delivered on time due to the obstruction in the Hormuz waterway, and high fares have affected the industries. There are 400 industries registered in the association, which export ready-made garments along with the domestic market.

Krishnaraj Timilsina, operator of Thread Garment in Imadol, Lalitpur, says that the main challenge at present is the increase in the price of goods coming to Nepal. He said that since the textile industry itself is energy-dependent, the cost of electricity and fuel used in the spinning, weaving, dyeing and finishing processes has increased, which has increased production costs. When manufacturing companies shift production costs to brands and retailers, the burden of the retail price of clothes is seen to fall on consumers. However, since clothes are an optional expense, businessmen say that demand for ready-made clothes will decrease as consumers reduce spending on clothes due to economic uncertainty or rising inflation.