A buy-local rule aims state demand at idle cement mills

The government has ordered public construction projects to build roads from domestically made cement rather than imported bitumen wherever it is technically feasible, under a procurement rule the cabinet approved on Friday. The decision hands the country's cement and steel mills a captive buyer at a time when both run well below capacity.

Why it matters: it points a steady stream of state infrastructure spending at listed manufacturers, replacing billions of rupees of imported bitumen with home-produced concrete and reinforcing bar.

The new directive makes domestic materials the default across government work. Where a suitable local option exists, agencies may not design roads, bridges or buildings around foreign materials, and tenders must specify home supply from the feasibility and detailed-project-report stage onward. Once a contract names a domestic material, switching to an import needs approval.

The rules reach past roads into government buildings, favoring domestic marble, stone, slate and tile over imported granite in finishing, wiring, furniture and sanitary work. Agency heads, consultants and approving officials are made answerable for compliance, and suppliers who pass foreign goods off as local face rejected deliveries, withheld payment and blacklisting. The infrastructure ministry counts 12 policy changes in all.

By the ministry's own account, cement plants are running at about 60% of capacity and steel rebar makers near 40%. The mandated offtake is aimed squarely at that slack.

The manufacturing sub-index, which carries the listed cement and steel names, closed the latest session at 10,589.93, little changed over the past month and still short of its 52-week high of 12,106.75. The group has trailed a NEPSE index that has edged up over the same stretch.

The measure lands as policy, not yet as orders placed. The test for the trade is whether the first road and building tenders issued after the Dashain break carry the binding domestic-material clause the rule requires, and how quickly that reaches cement and rebar volumes.