Nepal's handicraft exports fell by 5.4 percent in the first eight months of the current fiscal year, triggered by a sharp decline in exports of pashmina products, metal craft and handmade paper products, a local handicraft association said on Sunday.

The Federation of Handicraft Association Nepal (FHAN) stated in its report that the country exported 1.81 billion Nepali rupees ( 25.85 million U.S. dollars) worth of handicraft goods in the first eight months of 2006/07 ending in mid-July, as against 1.91 billion rupees (27.28 million dollars) of the similar period last fiscal year.

Exports had come down in the review period due mainly to the fall in demand of major foreign currency earning goods such as pashmina, metal and handmade paper products, the FHAN report said.

According to the report, export of pashmina products came down by around 19 percent to 362 million rupees (5.17 million dollars) during the eight month period.

Officials of FHAN attributed the decline to inability of Nepali goods to compete with pashmina products manufactured by Chinese and Indian companies.

Pashmina products make the largest contribution of around 20 percent to the total handicraft export in Nepal.

Metal craft and handmade paper products contribute to around 13 percent and 8 percent of the total handicraft exports respectively, the report said.