August 30: Province 2 has a high potential for industrial development, according to Nepal Rastra Bank (NRB). Favourable terrain of the province, sufficient manpower, road network, and access to border points all indicate to high potential for industrial development in the province, according to a study conducted by the central bank.

Nepal Rastra Bank had conducted a study on the economic activities of Province 2 during the first six months of the last fiscal year 2077/78. The study has shown high potential for industrial development in Province 2.

The study says that the province has high commercial potential for industries that produce items of religious and cultural significance based on traditional crafts. As there are famous religious as well as tourist sites in Province 2, the study has shown that the income of the local people can be increased by promoting such religious tourism. The study has shown that the base of revenue mobilization will be widened if such industries are promoted.

The study has also pointed out that production costs will be less in Province 2. As Province 2 is the second-most populous province, there seems to be a smooth supply of labor. As a result, industrial costs are estimated to remain low.

The study has also shown that increasing production by establishing industries in the state will increase the competitiveness of the products.

As most of the territory of Province 2 is connected to the Indian border, transportation of industrial raw materials from India will also be cheaper. As a result, it is possible to produce goods at a low cost and export them to India easily.

As there is a road network connecting the federal capital Kathmandu and other hill districts, including the east-west highway in the state, it will be easier to supply the manufactured goods across the country. The study report has shown that agro-based industries such as milk, fish, meat, and grains have a huge potential in the province. There is ample potential to supply the products all over the country, the report suggests.

Due to the favourable terrain, running industries in the province seems to be comparatively easier.

The study has shown that employment opportunities can be increased within the country if a large number of industries are established.

Due to the abundant production of grains like paddy, wheat, maize, and geographical location, the state also has a tremendous possibility for flour-based industries.

Executive Director of Nepal Rastra Bank, Prakash Shrestha, said that the potential for industrial development in Province 2 is high.

“During the study, we found the potential for industrial development in Province 2 high due to various reasons. However, the study shows that there are some challenges as well,” he said.

Coronavirus poses challenges to revive the industries and businesses, and also to reduce production costs, improve labor relations, and reduce losses of raw material.

Similarly, the study report states that there is a challenge to create a conducive environment for setting up new industries due to the high price of land.

There is also a challenge to supply skilled manpower to the industrial sector. The study report states that reducing the production cost, increasing competitiveness of industrial goods, and encouraging the establishment of industries based on local raw materials will also be a challenge.

Given that most of the industries are based on raw materials imported from India or other countries and the backward linkages of such industries are weak, setting up industries based on local raw materials is also seen as a challenge.

Most of the industries operating in Province 2 are operating at less than 50 percent capacity.

The study has shown that creating an environment for timely availability of raw materials for the industry as well as creating an environment for exporting goods to neighboring countries by expanding the market for manufactured goods is also a challenge.

Although there is good potential for agriculture and fishery in the state, it is not commercially viable. Establishing fish processing industries to end seasonal fish production is also seen as a challenge.

Due to misunderstandings between sugarcane farmers and industrialists from time to time, making the country self-reliant in sugar is also seen as a challenge. The study has shown that Nepal should be made self-reliant in sugar production by finding a long-term solution to the misunderstanding between the farmers and the industrialists.