 Towards the end of the nineteenth century, Nepalese arts and crafts industry and the entire home based industries in general suffered a great deal due to the general liberal import policy of the government.Prior to the establishment of British regime over India and entering a peace treaty with Tibet in 1904 AD, Nepal was interpreted as the main route to Tibet for external trade with other countries.But the treaty of 1904 AD facilitated the British to open a new route between India and Tibet through Chumbic Valley and the trade route treaty of 1923 AD between Nepal and British India, which was not in favour of Nepal and had very unfavourable effects both on industries and on flourishing trade of the country.