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Pace Footwear Pvt. Ltd.

Pace Footwear Pvt. Ltd. By: Kritika K.C. (17314). Introduction. Company’s Name: Pace Footwear Pvt. Ltd. Product: Causal Shoes, Sports Shoes, Formal Shoes, Party Shoes Regulator: Department of Industries

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Pace Footwear Pvt. Ltd.

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  1. Pace Footwear Pvt. Ltd. By: Kritika K.C. (17314)

  2. Introduction • Company’s Name: Pace Footwear Pvt. Ltd. • Product: Causal Shoes, Sports Shoes, Formal Shoes, Party Shoes • Regulator: Department of Industries • Associations: Footwear Manufacturers’ Association of Nepal (FMAN), Leather Footwear and Goods Manufacturers Association of Nepal (LFGMAN), Felt Association

  3. Acts • Industrial Enterprise Act, 2016 • Private Firm Registration Act, 1958 • Trade Policy, 2015 • Labor Act, 2017 • Foreign Exchange Act 2962 • Import and Export (Control) Act, 1957

  4. About Footwear Sector • Footwear products Integrated in the priority list of NTIS 2016 • Annual production- 30 million pairs (Five-Year Strategic Plan 2014, prepared by the HELVETAS-Employment Fund for FMAN) • Production Capacity- 111.97 million pairs (FMAN) • The domestic market coverage by domestic products is 42 percent in 2014/15 • Per capita footwear consumption - 2.66 in 2015/16 • Employment to 60,000 persons, 30 percent of whom are women in 2015/16

  5. Political Environment • Federalism: Inter state competition • Corruption Perception Index • 2016 – 131st out of 176 countries (29) • 2017 – 122nd out of 180 countries (31) • Politically sensitive sector • Presence of Labor Union

  6. Social Environment • Perception regarding shoe making industries has changed • Deeply rooted belief that international brands were better (Mr. Prasai, Managing Director at Shikhar Shoes) • Choice of footwear of Nepalese consumers is increasing • Shortage of skilled as youths are going abroad • High degree of homogenization

  7. Economic Environment • Share of manufacturing industry in GDP – 5.67% (CBS: 2017) • Nepali footwear industry contributes one percent to the GDP (2016) • 88th position in global competitiveness index (GCI) 2017-18 • Ease of doing business: 105th globally and 3rd among South Asian (Source : Doing Business, 2017) • Remittance inflow grew by 5.3 percent to Rs. 450.00 billion in the first eight months of the fiscal year 2016/17 (Economic Survey 2016/17)

  8. Import above USD 40 thousand from third country and above IC 5 crore from India will be required transacted through Letter of Credit. (Monetary Policy, FY 2017/18) • Export oriented industries such as jute, carpet, garments, pashmina, silk and cotton-based industries, footwear and handicrafts will be promoted.( Budget Speech, FY 2017/18)

  9. Technology • Most of the production processes are manual and labor intensive • Almost all the machineries needs to be imported from other countries • Limited investment in technology and infrastructure • Large scale manufacturer moving from labor intensive to capital intensive • Insufficient training and support

  10. Legal Environment • Private firm registration Act 2014 (1958) • Industrial Enterprise Act 2073 -“No Work No Pay" provision -35% exemption in existing Industry Registration Fees for Women -1% of annual profit to be allocated towards CSR • Trade policy 2015 • Labor Act, 2074 -Hiring Foreign Nationals

  11. Environmental Environment • Relatively little adverse environmental impact • Cut pieces of leather are safely disposed of and synthetic cut pieces are recycled • Almost no noise and smoke is generated and some bad smell that is generated is limited to production areas

  12. International Environment • LDCs receive a special treatment by WTO members • Energy and Input Prices: Highly dependent on India and China for raw materials • Nepal has Bilateral Investment Agreements in force with four countries: France (1985), Germany (1988), the United Kingdom (1993), and Finland (2011) • Nepal has a free trade agreement with India (the Indo-Nepal treaty of trade, signed in 2002) • Nepal has a “Double Tax Avoidance” treaty with China, India, Mauritius, Sri Lanka, Pakistan, South Korea, Thailand, Austria, Norway, and Qatar

  13. Custom duty for Import www.customs.gov.np (2017/18)

  14. Source: Trade Map 2017

  15. Tariff Barrier: • India, Japan and Malaysia enable Nepal to import 6404 footwear tariff free • Vietnam (30%) • Thailand (27%) • South Africa (24%) • USA (20.4%) • Non- tariff Barriers: • Varied legislative hurdles on quality standards, safety standards, labeling and packaging standards (most stringent US and Germany)

  16. Conclusion • NTIS 2016–2020 as a golden opportunity for Nepalese footwear • Target by 2020: Produce 45 million pairs of footwear • High employment opportunity • Collective trademark for Nepali footwear launched (2014) • Provision of soft loan of NRs. 100–500 thousands through the DoCSI in 26 districts. • CTEVT and the GoN is taking initiative for required skill development for footwear production. • DoCSI is taking initiative for curriculum development. • TEPC taking care of skill development training

  17. Reference • Economic Survey, Ministry of Finance, 2016/17 • Industrial Enterprise Act, 2016 • Private Firm Registration Act, 1958 • Trade Policy, 2015 • Labor Laws, 2017 • Budget Speech, Ministry of Finance, 2017/18 • www.tepc.gov.np • http://www.pioneerlaw.com • http://kathmandupost.ekantipur.com/news/2014-06-05/collective-trademark-for-nepali-footwear-launched.html • https://www.customs.gov.np/en/ • http://kathmandupost.ekantipur.com/news/2017-07-17/rs-30-billion-domestic-shoe-industry-under-siege.html

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