Nepal: Clothing brands express interest in Nepal as potential production hub following 50% US tariff on Indian exports
"Hit by Trump’s steep tariffs, garment giants in India turn to Nepal", 31 August 2025
International readymade garment brands operating in India, including Indian labels exporting to the United States, have begun exploring Nepal as a potential investment and production hub, according to multiple sources...Nepali garment manufacturers also confirm that Bangladeshi investors have been visiting Nepal with similar interests.
The sudden wave of interest follows US President Donald Trump’s decision to impose steep tariffs—50 percent on Indian exports and 20 percent on Bangladeshi exports to the US. However, a US appeals court on Friday termed Trump’s blanket tariffs illegal.
In contrast, goods imported from Nepal face only a 10 percent tariff...
“Several Indian garment companies are actively exploring the possibility of establishing factories in Nepal, while others are looking into partnerships with local producers to enhance capacity for exporting to the US,” Pashupati Dev Pandey, president of Garment Association Nepal, told the Post.
International brands that have traditionally manufactured in India—such as GAP, Puma, Nike, and Zara—are among those showing interest in relocating part of their production chain to Nepal, said Pandey.
“If possible, Indian readymade garment companies want to begin investing within six months. Some may collaborate with Nepali firms, while others could operate independently. They are currently reviewing the legal procedures, and we are ready to support them,” Pandey added...
However, officials in Kathmandu say there have been no formal inquiries. “The Department of Industry has not received any inquiries or foreign direct investment proposals from Indian garment companies,” said Prashant Bohara, director of the department’s Foreign Investment and Technology Transfer Section...
With Indian exporters already sitting on huge stockpiles of garments meant for the US market before the tariff hike, some reportedly eye Nepal as a potential backdoor. “There are concerns they may try to ship goods via Nepal using counterfeit ‘Made in Nepal’ labels to disguise the country of origin,” one source said...