SATV, Kathmandu, May. 26 - Industrial capacity utilisation in Madhes Province has shown a gradual improvement during the first half of the current fiscal year, alongside moderate growth in credit, according to a provincial economic report.

The Half-Yearly Economic Activities Study Report published by the Nepal Rastra Bank, Janakpur Office, shows that average capacity utilisation of surveyed industries in Madhes Province increased to 36.89 per cent, up from 34.59 per cent in the same period of the previous fiscal year.

Among industrial categories, the liquor industry under the beverage sector recorded the highest utilisation at 83.13 per cent, indicating strong production performance. 

In contrast, the synthetic textile industry under the textile and garment sector registered a sharp low of just 2.90 per cent, reflecting weak operational activity. Other key sectors showed mixed performance. Domestic metal industries operated at 32.46 per cent, down from 43.33 per cent last year. 

In the vegetable ghee and oil category, mustard oil industries utilised 31.53 per cent of their capacity, a sharp decline from 52.11 per cent a year earlier.  Soybean oil industries, however, remained stable at 28.24 per cent capacity utilisation. Within the grain and animal feed category, rice industries operated at 28.49 per cent capacity, while animal feed industries recorded 46.74 per cent utilisation, slightly higher than last year’s 45.90 per cent.

In the textile sector, yarn industries utilised 28.67 per cent of their capacity compared to 30.17 per cent last year, while synthetic textile industries saw a steep drop to just 2.90 per cent from 6.40 per cent.

Among other industries, cigarette industries recorded 18.86 per cent utilisation, sugar industries 39.31 per cent, processed leather 35.57 per cent, and dry syrup industries 11.13 per cent. 

Compared to same period last year, sugar industries showed a significant improvement from 9.86 per cent, while dry syrup industries increased from 3.93 per cent.

Industrial credit rises by 2.67%, Parsa dominates with 63.55% share

Meanwhile, by mid-January 2026, deposits mobilised by banks and financial institutions in Madhes Province increased by 20.90 per cent, reaching Rs. 427.27 billion. However, credit flow also increased by 2.39 per cent, reaching Rs. 500.7 billion.

Likewise, credit disbursement extended to the private sector by BFIs in Madhes Province increased by 2.67 per cent, reaching Rs. 128.47 billion during the review period, up from Rs. 125.13 billion in the same period of the previous fiscal year.

During the review period, of the total credit of Rs. 128.47 billion extended by BFIs to the industrial sector, 53.25 per cent was directed toward non-food manufacturing industries, 35.36 per cent toward agriculture, forestry, and beverage production industries, and 5.38 per cent toward construction industries.

Similarly, about 4.43 per cent of credit extended by BFIs went toward metal production, machinery, electronics, and metal goods manufacturing industries, 0.61 per cent toward electricity, gas, and water industries, and 0.97 per cent toward mining industries.

District-wise, Parsa accounted for the highest share of industrial credit at 63.55 per cent, while Saptari recorded the lowest at 2.16 per cent. The concentration of industries in Parsa district is cited as the main reason behind the higher credit flow in the area.

The report emphasised structured industrial development by promoting industrial corridors, zones, villages, and special economic centres based on market access, labour availability, transport connectivity, and raw materials.

The focus is on improving the competitiveness of industries to match foreign products and ensuring transparent and accountable business practices to build investor confidence and institutional culture. Policies aim to reduce production costs, strengthen labour relations, and ensure year-round industrial operation by minimising disruptions.

Madhes GDP to grow by 1.31%

The National Statistics Office has estimated Nepal’s Gross Domestic Product (GDP) to reach Rs. 6,600 billion in fiscal year 2025/26, with an economic growth rate of 3.85 per cent in the current fiscal year.

For Madhes Province, GDP is estimated at Rs. 863.33 billion, with a growth rate of 1.31 per cent in 2025/26. 

In the province, agriculture, forestry, and fisheries are estimated to contribute the highest share at 34.97 per cent, while mining contributes the least at 0.14 per cent. Per capita GDP is estimated at USD 934 in Madhes Province.