Government Should Become the First Customer of Domestic Products

The debate over building a self-reliant economy is not new in Nepal. Successive governments have repeatedly promised to increase production, reduce imports, create employment and revive closed industries. But one of the biggest challenges facing Nepali industries is not only whether they can produce goods, but whether they have a reliable market once production begins. This is where the role of the state requires serious reconsideration. The government should not merely promote domestic production; wherever feasible, it should also become its first and most dependable institutional customer.

The recent trial production at Hetauda Textile Industry after nearly 26 years carries symbolic importance in this context. Initial testing, supported technically by the Nepal Army, has shown that parts of the industry can potentially be brought back into operation. Full commercial revival, however, will still require new technology, capital, professional management and a clear operating model. Whether this effort succeeds or becomes another short-lived government announcement will depend largely on whether the state can ensure a viable market for the products.

The Government of Nepal itself is one of the country’s largest purchasers. The Army, Nepal Police, Armed Police Force, hospitals, schools, universities, ministries, local governments and public institutions purchase uniforms, furniture, medicines, paper, food supplies, construction materials, information technology equipment and many other goods every year. If domestically produced goods that meet required quality standards are given reasonable priority in such procurement, government demand alone could provide industries with a stable initial market.

However, the label “domestic product” should not become an unlimited guarantee of protection. Nepali industries should not be allowed to supply poor-quality goods, charge excessively above market prices or avoid competition simply because they receive government preference. Supporting domestic production does not mean forcing the state or consumers to accept inferior products. Clear standards are therefore essential for quality, competitive pricing, timely delivery, transparent procurement and regular inspection.

The same caution applies to Hetauda Textile Industry. Restarting old looms is an encouraging beginning, but the factory cannot be sustained on emotional nationalism alone. Production costs, machinery upgrades, raw materials, yarn supply, market demand, management and long-term financial viability must all be assessed rigorously. If the security agencies and other public institutions can purchase a defined portion of their uniform requirements from the factory at competitive prices and acceptable quality, it could provide the industry with an initial market base. From there, the factory could gradually expand toward private and export markets.

The same principle can be applied to medicines, paper, furniture, agro-processing, construction materials and information technology. This does not mean that the state must produce everything itself. Where the private sector is capable, the government should provide fair opportunities to domestic producers. Where strategically important state industries are inactive or dysfunctional, options should remain open for restructuring, public-private partnerships, technology transfer or, where necessary, changes in ownership and management.

Nepal must turn import substitution from a slogan into a gradual industrial policy. It is neither possible nor economically sensible to produce everything domestically. But where raw materials, skills, labor, market demand and technological capacity are available, continued dependence on imports is equally difficult to justify.

Domestic production needs markets more than speeches. Private consumers cannot be ordered to buy Nepali products, but the government can lead by example through its own procurement policy. If domestic industries are given opportunities under clear conditions of quality and competitiveness, public spending can become not merely a tool of expenditure but also an instrument of industrial development.

Self-reliance does not come from closing borders. It comes from building productive capacity. The government can begin by becoming a responsible and reliable customer of what Nepal is capable of producing.