According to the report, the rise in fuel prices and raw materials globally has increased the cost of industries relying on foreign raw materials and made it challenging for them to make a profit by selling products in the market.
In the past two fiscal years, industrial operation and production activities in the country were hampered by the lockdowns imposed to contain the spread of the Covid-19 pandemic. However, there was no such restriction in the last fiscal years yet the capacity utilization of industries increased marginally. The central bank report shows the capacity utilization of industries producing ghee, processed milk, rice, wheat flour, sugar, chocolate, beer, soft drinks, yarn, jute goods, raw leather, processed leather, sawn wood, plywood, paper, rosin, paint, medicine, and cement has increased in FY 2021/22. Similarly, the capacity utilization of industries manufacturing iron rods and sheets, steel products, GI pipes, household metal products, aluminum products, electric wires and cables, tires and tubes, footwear, and power generation also improved in the last fiscal. However, the capacity utilization of industries producing mustard oil, soybean oil, animal feed, biscuits, noodles, processed tea, alcohol, cigarettes, synthetic fabrics, soap, plastic products, bricks, concrete, GI wire, and slippers declined in the last fiscal year. In the last fiscal year, the capacity utilization of the cement industry was the highest (93.8 percent), while the lowest was of the pharmaceutical industry, particularly dry syrup producers (9.9 percent). The report has pointed out the development of minimum infrastructures such as roads, electricity, and communication to create an investment-friendly environment, and the need to attract foreign investment in the industrial sector for technology transfer and management capacity enhancement. " The places that have the potential for industrial development should be developed as industrial zones," said the report. According to NRB, industrialists are still facing challenges such as the rising cost of establishing an industry due to exorbitant land prices and ensuring the availability of skilled labor by preventing the migration of semi-skilled and skilled manpower. Effective management and expansion of existing industrial areas/corridors and special economic zones, increasing the production and consumption of indigenous industrial raw materials, making the industrial supply chain effective, creating an investment-friendly environment and increasing investment in export industries having comparative advantage are still existing challenges in the industrial sector. Industry registration surged by 52% Industry registration in the country surged by 52 percent in the last fiscal year. The NRB report says a total of 309 industries were registered in the Department of Industry in FY 2021/22 compared to 203 industries in FY 2020/21. Of the total registration, 131 were registered in Bagmati Province, 51 in Lumbini Province, 48 in Madesh Province, 42 in Province 1, 24 in Gandaki Province, 10 in Sudur Paschhim Province, and 3 in Karnali Province. Investments surged by 119.32% As per the NRB report, investments in industries surged by 119.32 percent in the last fiscal year. The industries registered at the Department of Industry pledged Rs 343.55 billion in investment in FY 2021/22 compared to Rs 156.64 billion in FY 2020/21. Box 1 Average Capacity Utilization of Industries in the last three fiscal years FY Capacity Utilization 2021/22 52.8% 2020/21 52.2% 2019/20 48.4% Box 2 Average Capacity Utilization of Industries in FY 2021/22
| Industry | Products | Average Capacity Utilization |
| Vanaspati Ghee & Oil | Vanaspati Ghee | 11.87 % |
| Mustard Oil | 42.74% | |
| Soyabean Oil | 82.33% | |
| Milk | Processed Milk | 30.32% |
| Grain and Animal Feed | Rice | 32.82% |
| Wheat Flour | 50.74% | |
| Animal Feed | 66.49% | |
| Other Food Products | Biscuits | 60.65% |
| Sugar | 36.67% | |
| Chocolate | 80.38% | |
| Noodles | 82.35% | |
| Processed Tea | 65.18% | |
| Beverage | Alcohol | 68.48% |
| Beer | 79.50% | |
| Soft Drinks | 50.46% | |
| Tobacco Products | Cigarette | 52.92% |
| Apparel, Carpet, and Jute Product | Yarn | 70.19% |
| Synthetic Fiber | 42.87% | |
| Garments | 27.16% | |
| Jute Product | 61.31% | |
| Leather and Processed Leather | Processed Leather | 34.15% |
| Raw Leather | 54.49% | |
| Paper | Paper | 31.59% |
| Other Chemical Product | Paints | 69.60% |
| Tablet | 35.13% | |
| Capsule | 15.59% | |
| Ointment | 28.50% | |
| Dry Syrup | 9.88% | |
| Liquid | 22.40% | |
| Soap | 28.94% | |
| Plastic Product | Plastic Product | 52.77% |
| Polythene Pipe | 71.20% | |
| Non-metallic Mineral Products | Bricks | 62.83% |
| Cement | 46.06% | |
| Concrete | 93.80% | |
| Fabricated Metal Goods | Iron Rods and Sheets | 60.66% |
| Steel Product | 91.96% | |
| GI Wire | 32.53% | |
| GI Pipe | 91.51% | |
| Electrical Equipment | Electric cable and wire | 15.96% |
| Rubber Product | Tyre and Tube | 53.75% |
Comments