Surat textile, India's biggest man-made fabric (MMF) sector has set their eyes on Nepal as a large number of textile factories in Nepal have either closed down or are on the verge of closure due to labour unrest, high taxes, and unclear government policies etc.

The office-bearers of the Federation of Surat Textile Traders Association (FOSTTA) are planning to visit Nepal, their neighbouring SAARC country to explore opportunities to increase the textile trade.

The ambassador of Nepal, Jenisha Bhatrai had visited the textile city last week and met leaders of textile industry, including the Southern Gujarat Chamber of Commerce and Industry (SGCCI). The Nepalese ambassador was given the overview about the city's textile trade in the man-made fabric field. She requested the traders to increase their business ties with their Nepalese counterparts.

According to Devkishan Manghani, office-bearer of FOSTTA, Nepal is the important destination as far as the polyester fabrics consumption is concerned. Nepal's textile sector, which is mostly cotton and synthetic based, is passing through a tough phase as many factories have closed down in the past couple of years. This is the right time for Surat traders to tap the Nepalese market.

Around Rs 1,200 crore worth of fabric is exported from Surat to various destinations including the UAE, the US, Europe etc. None of the exporters are ready to export fabrics to Nepal due to the high duty structure. As the import duty structure in Nepal is not advantageous for the Surat textile traders.

There is a huge potential in Nepal provided the government gives some tax relief and makes the structure at par with that being offered to China. Polyester fabric exports to Nepal attract customs duty and VAT in the excess of 32%. Against this, Nepal provides tax relief to the fabrics and garments exported by China which attract only 17% duty.

They would be meeting the government authorities, demanding reduction in customs and VAT duties charged by the Nepal government on imports of polyester fabric from India.