The gap and nike nepal sourcing conversation is no longer a rumor. Tariff shocks on India have forced sourcing teams to rethink awards. Brands want resilience, smaller MOQs, and credible ESG. Nepal offers a rare mix: preference programs, hydropower, and improving border processes. This guide explains why foreign companies are testing Nepal now, what to place there, and how to pilot in 90 days.
India’s U.S. tariff exposure on apparel increased.
Buyers are reallocating duty-sensitive SKUs.
Nepal benefits from preference programs and clean energy.
ICPs and dry ports shorten border friction with India.
A 90-day Nepal capsule can de-risk your next season.
Tariffs flow straight into landed cost. When duty rises on a major origin, buyers shift awards to alternatives with lower exposure. That is what’s happening now. India remains essential for design-heavy wovens and near-port speed. Yet the duty gap makes capsules and accessories more attractive in Nepal. Brands are re-portfolios: two anchors for scale, plus one specialty hub for duty-sensitive lines.
Key idea: The same hoodie can land in very different duty bands by origin alone. Awards follow those bands.
Preferential access: U.S. Nepal Trade Preference Program (NTPP) covers a defined list of tariff lines through December 31, 2025. The EU Everything But Arms (EBA) scheme provides duty-free access while Nepal is an LDC.
ESG story: A hydropower-dominant grid supports low-carbon claims and Scope 2 targets.
Agility: Smaller factories accept small to mid MOQs with faster changeovers and hands-on QA.
This isn’t a headline play. It’s an allocation strategy.
Place duty-sensitive capsules and headgear/accessories in Nepal.
Keep tees, fleece repeats, and denim basics in Bangladesh.
Use India for fashion wovens, heavy embellishment, and premium capsules.
Use Vietnam for sportswear, outerwear, and engineered knits.
Dual-source top silhouettes to protect continuity.
Reserve line time early. Peak months fill fast.
NTPP (U.S.) — duty-free for 77 tariff lines; check the list and dates.
EBA (EU) — duty-free for LDCs; Nepal’s LDC graduation is targeted for 2026.
GSP+ (EU) — possible post-graduation path; plan documentation early.
SAFTA — regional cumulation can allow inputs from neighbors under set thresholds.
FITTA 2019 (Nepal) — permits 100% foreign ownership outside the negative list.
Labour Act 2017 (Nepal) — wage floors, CBAs, and safety framework.
Naming these frameworks strengthens internal governance and external audit readiness.
Use this to frame your next RFQ and award decisions.
| Factor | Nepal | Bangladesh | India | Vietnam |
|---|---|---|---|---|
| U.S. duty exposure | Lower on eligible lines; preference window via NTPP | Moderate; strong for volume even without preferences | Higher on many lines after surcharges | Moderate; no U.S. FTA |
| EU access | Duty-free via EBA while LDC; plan GSP+ | Duty-free via EBA (watch graduation) | Standard GSP; product-specific | EVFTA preferences |
| MOQ / flexibility | Small–mid; agile changeovers | Large; optimized for basics | All scales; complex fashion | Mid–large; technical builds |
| ESG / energy | Hydro-dominant grid; rising solar | Mixed grid; improving | Mixed grid; renewables push | Mixed grid; strong compliance leaders |
| Lead-time | Predictable with border buffers | Good; port congestion in peaks | Good; watch festival peaks | Strong and consistent |
| Best fits | Fashion knits, accessories, headgear, capsules | Tees, fleece, denim basics | Fashion wovens, embroidery, value-add | Sportswear, outerwear, engineered knits |
| Watch-outs | Preference timelines; landlocked logistics | Holiday congestion, dyehouse queues | Tariff exposure to U.S. | Bonded-zone tightness in peak |
Always verify HTS, rules of origin, and current policy dates before placement.
Nepal: embellished fashion knits, knit accessories, seasonal headgear, soft midlayers, small-run capsules.
Bangladesh: tees, fleece repeats, denim basics, multi-season carryovers.
India: complex trims, embroidery-heavy wovens, premium capsules, quick PD iterations.
Vietnam: performance knits, laminated outerwear, multi-panel engineered garments.
Scope SKUs: Pick 6–10 duty-sensitive styles suited for small to mid MOQs.
Validate HTS: Confirm eligibility under NTPP/EU EBA; write rules of origin into tech packs.
Shortlist vendors: Select two Nepal factories with matching processes and audit history.
Materials: Lock fabric and yarn with regional mills; pre-book dyehouses.
Trims & packaging: Standardize specs to avoid repacks; pre-approve carton tests.
Samples: Run fit and PP with dated sign-offs; freeze size sets.
Compliance files: Build an origin dossier: BOM, cutting, sewing, finishing, photos.
Lines & IE: Launch modular lines; balance SMV and changeovers.
QA gates: Add bundle-start, mid-line, and final AQL checks.
Routing: Book Integrated Check Post (ICP) clearance and forwarder slots early.
Shipment: Match transport documents to production flow; keep a clean chain of custody.
Retro: Review AQL, OTIF, returns, claims; decide scale-up or pivot.
Approve lab dips and shade bands on firm SLAs.
Use standard markers to raise fabric yield.
Lock mill greige earlier than usual.
Publish a calendar SLA for tech packs and first articles.
Keep a live vendor risk register by lane.
Add one-week buffers around monsoon and major holidays.
Two principles decide eligibility: rules of origin and substantial transformation. Cutting, making, and trimming generally define origin. Minor finishing or relabeling does not. Customs will check your evidence.
Your origin dossier checklist
HTS classification sheet per style.
BOM with origin per component.
Cutting, sewing, finishing logs with dates and lines.
Photos/videos of transformation steps.
Supplier declarations for fabric, trims, packaging.
Transport documents mirroring production flow.
Master checklist signed by QA and compliance leads.
Keep this file ready before first shipment.
Nepal is landlocked, but lanes are stable with planning. ICPs on the India border consolidate customs, scanning, and warehousing. Established corridors include Raxaul–Birgunj and Jogbani–Biratnagar; western routes such as Rupaidiha–Nepalgunj add capacity. Dry ports and rail heads reduce dwell. Align cut-off calendars with port sailings and festival schedules.
Price follows exposure, speed, and certainty. Anchor basics where scale is proven. Place duty-sensitive capsules in Nepal. Keep technical builds in Vietnam. Use India for complex fashion and fast PD. Dual-source hero styles across two countries. Re-bid quarterly as policy, capacity, and calendars change.
Run a twin-origin model. Move eligible U.S. lines to Nepal. Keep India for EU/UK and premium capsules. Share fabrics and trims regionally where rules allow. Harmonize QA, care labels, and packaging. Maintain one claim template across both origins to simplify audits.
Structure: Use FITTA 2019 for 100% foreign ownership (outside the negative list).
Approvals: Work through the One-Stop Service Center at the Department of Industry.
Zones: Consider border-adjacent SEZs targeting export manufacturing.
Finance: Plan profit repatriation and duty relief on capital goods per the rulebook.
People: Invest early in IE, QA, and supervisor training to lift throughput.
Model three scenarios: NTPP sunset, EBA→GSP+, and staged capacity ramp.
Preference timelines: Track NTPP and EU graduation milestones; set fallback lanes.
Transshipment risks: Ban relabeling or minor finishing to claim origin.
Border shocks: Add buffers around elections, festivals, and weather events.
Documentation gaps: Train team leads on origin files and audit drills.
Capacity illusions: Reserve floor time early in peak seasons.
Testing holds: Pre-book labs; align chemical and RSL calendars.
Capsule A: 12 fashion knit styles, Nepal origin, MOQ 500–1500 per color.
Capsule B: Knit accessories and headgear, Nepal origin, mixed packs.
Carryovers: Tees and fleece repeats awarded to Bangladesh.
Tech lane: Performance midlayers awarded to Vietnam.
Fashion lane: Embellished wovens awarded to India.
1) Why are GAP and Nike exploring Nepal now?
Tariff exposure on India rose. Nepal offers preference paths, clean energy, and flexible MOQs. It is ideal for duty-sensitive capsules and trials.
2) Does Nepal really provide duty relief into the U.S. and EU?
Yes, for defined lines and while LDC status remains. The U.S. program lists specific tariff lines. The EU’s EBA grants duty-free access for LDCs. Always verify HTS and origin rules.
3) Can Nepal handle small, fast orders?
Yes. Modular lines and smaller plants allow quick changeovers. It suits capsules, drops, and trials. Lead times improve with early fabric and dyehouse bookings.
4) What compliance steps are vital for Nepal origin claims?
Document substantial transformation. Keep a full dossier: BOM, cutting, sewing, finishing, visual proof, and transport flow. Align supplier declarations with your HTS and preference rules.
5) What are the biggest risks to plan for?
Program timelines, transshipment exposure, and border delays. Mitigate with buffers, strict documentation, dual-sourcing, and ongoing audit readiness.