Medicinal and aromatic plants (MAPs)offer opportunities for sustainable economic growth inNepal.Nepal currently does not hold a significant share ofglobal markets for MAPs, but MAPs are relatively moreimportant in Nepal’s export basket compared with othercountries.Nepal currently does not hold a significant shareof global markets for MAPs, but MAPs are relatively moreimportant in Nepal’s export basket compared with othercountries.Market access is affected by non-tariff measuresin this sector.Currently, Nepal primarily competes in thesegment of raw and unbranded MAPs for the non-discerninguser. This segment has minimal value addition and a highdegree of global competition.This study identifies twosegments where Nepal is well positioned to compete in theshort to medium term: (i) lightly processed products for thediscerning and conscientious consumer, specifically personalcare products; and (ii) heavily processed, mass-producedproducts for non-discerning buyers, specifically Ayurvedicand traditional medicine products.Personal care products arean attractive market segment for individual Nepalientrepreneurs and micro, small and medium enterprises(MSMEs).Nepali firms have the potential to integrate intoregional and global value chains for traditional herbal andAyurvedic medicinal products.While Nepali firms have thepotential to compete successfully in the two identifiedsegments, they face many challenges that need to beaddressed. Many of the constraints in the MAPs value chainsin Nepal are similar to those across the broaderagribusiness sector.These challenges include issues withland rental and aggregating land; lack of investment inphysical infrastructure; lack of R & D; distortions ininput markets (fertilizer and seeds); poor extensionservices; inadequate support for building firm capabilities;weak quality infrastructure (for testing and certification)that restricts access to foreign markets; poor logistics;insufficient investment in supply chains; and poor access tofinance for smaller players in the sector.Sustainability ofMAPs is a major concern, especially in higher elevationareas, and requires continued conservation efforts.Thegovernment should ease trade frictions for suppliersproviding raw materials to domestic manufacturers.In thepersonal products segment, Nepali firms could benefit from amore conducive environment for e-commerce and skillsdevelopment.The Ayurvedic and traditional medicine productssegment in Nepal could benefit from protecting Nepal’scultural heritage and traditional medicine systems,implementing intellectual property rights (IPR) polices tosupport private sector growth and attract FDI, and researchsupport to identify the intensity of specific MAPs in theirmost common final products.Global demand for MAPs,especially as inputs for more complex final goods, has beenincreasing steadily since the turn of the century. Nepal hasthe potential to tap into this demand and competesuccessfully in this market if the challenges faced byNepali players in the MAPs value chains are addressed.
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