The government of Nepal has initiated construction of a Rs 2.5 billion garment processing zone in the Simara Special Economic Zone (SEZ). As production costs in Nepal are relatively high in the region, this project, which is expected to be completed by 2018-19, will lower the cost of production and increase exports. The services offered at the processing zone will make the price of Nepali products competitive in international markets.

The SEZ, located in Bara district, will be spread in over 300 bighas of land and is expected to house at least 30 apparel production units. Chandika Prasad Bhatta, Executive Director, SEZ development committee says garment manufacturers can purchase the plot at Rs 20 per sq. mt. with infrastructure such as electricity, drainage and other such logistics at an affordable price. Firms exporting at least 75 per cent of their production can also benefit from the services.

"Companies with a history of being a large exporter, providing jobs to a large number of people and making large investments will be given priority to operate their production units inside the processing zone," Bhatta disclosed. The garment processing zone is expected to compensate for high transport and shipment costs due to Nepal's landlocked status because the proposed zone is located near the country's only rail-linked dry port in Birgunj.

The garment processing zone went full steam ahead post the US extending zero tariff preference for 66 products, including apparels, into its market through the 'Trade Facilitation and Trade Enforcement Act'.