Hetauda Kapada Udhyog – A Story of Rise, Fall and Hope for Revival

The story of Nepal’s largest textile factory, a tale of success and tragic downfall: How did a thriving industry get ruined? What is its future now? When will its glory be restored?

The Hetauda Kapada Udhyog  ‘Hetauda Textile Industry’ was once so popular that even its employees used to get special respect in society. People across the country were eager to wear the fabrics produced by Hetauda Textile. The fabrics manufactured by Hetauda Textile are still fondly remembered by many.

Once enjoying monopoly in Nepal’s industrial garment market, the Hetauda Textile Industry, which is now on the verge of extinction, has become a tale of the past. It is occasionally mentioned by political leaders and ministers in their political speeches. Promises to revive Hetauda Textile by everyone from Chief Ministers to Prime Ministers have become a popular rhetoric. But in reality, no one has been able to revive its operations so far.

The industry, built with Chinese aid and Nepali government ownership, has been completely shut down since 2057 BS (2000 AD). The construction started in 2032 BS (1975 AD) with Chinese cooperation and it began operations in 2035 BS (1978 AD). Built on 243 ropanis of land in Hetauda Industrial Estate with an investment of 17 crore rupees, the Hetauda Textile Industry has now become a story of the past.

Initially, the industry operated in only one shift. As it expanded, it started operating in two shifts from 2038 BS (1981 AD) and three shifts from 2039 BS (1982 AD). At its peak with three shift operations, the industry used to produce:

– 110 million meters of grey fabric annually
– 250 metric tons of cotton fabric
– Same quantity of flannel and poplin fabric

The fabrics produced by the industry were of good quality and highly popular as they were made in Nepal. But political interference started growing as the government-owned industry expanded. The industry, which was racing to make Nepal self-reliant in garment production, eventually had to shut down.

Reasons for the decline:

– Recruitment based on connections rather than merit
– Unnecessary political recruitment of party cadres as employees
– Recruited cadres leaving work to participate in political protests
– Excessive political interference in management

The industry remained profitable for its first 19 years since establishment. But after the employee protests of 2054 BS (1997 AD) and appointment of managers based on political affiliation and interference, financial problems surfaced as the industry took a downward turn.

It had to take loans from banks for working capital and slipped into losses. It ran in losses for 3 years but managed to operate. Eventually the situation worsened leading to complete shutdown. On Magh 18, 2057 BS (Jan 31, 2000 AD), the Nepal Government cabinet took the decision to retire all workers and employees, announcing closure of Hetauda Textile Industry.

In 2058 BS (2001 AD), the government tried privatization by calling for bids but no bids were received despite two attempts.

Eight years after complete closure, when Baburam Bhattarai became Finance Minister in 2065 BS (2008 AD), he allocated 90 million rupees in budget to revive the industry but could not operate it. Since then, successive governments have only formed committees for study and reviews but have failed to resume operations. Finally in 2069 BS (2012 AD), the government scrapped the industry.

Various ministers have since visited the industry premises from time to time promising revival but never made any genuine efforts. As per valuation at that time, the industry may not even fetch a decent auction price now as the buildings and machines have deteriorated from two decades of closure.

Currently, the premises houses the office of Armed Police Force’s Battalion no. 14 with over 300 security personnel. The residential area land has been converted into a new industrial estate with allotment to industries. Out of the total 3119 ropanis area, 110 industries are currently operating in the estate.

The Nepal Army is preparing to get involved in operating the industry under its welfare fund.

Revival of the industry can significantly contribute to Nepal’s industrial development, generate employment, import substitution and stop youth migration – the hopes pinned on it.

The industry revival is estimated to cost 1.93 billion rupees. Additionally, 78 crore rupees have been projected as annual operational cost. The task force concludes the industry can attain cost recovery in 9 years after revival and turn profitable.

Once production resumes, the industry can supply essential fabrics to government offices and security agencies. Its production can also be exported.

Therefore, reviving the Hetauda Textile Industry seems beneficial for the country. The government and stakeholders need to have concrete plans, strategies and committed execution. It is crucial to avoid repeating past mistakes of politicization, corruption and negligence. Only with utmost prudence in these matters, this important and historic industry can be revived to its former glory. But can the government move beyond rhetoric and tokenism? That remains to be seen.


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