Foreign Trade Report 2025/26: India Dominates, China’s Share Shrinks

Nepal’s foreign trade profile for FY 2025/26 reveals a growing dependence on India, while China’s share in trade continues to shrink, according to Nepal Rastra Bank’s trade statistics.

Overall foreign trade rose by 18.8%, reaching nearly Rs. 1.67 trillion. Within this, India accounted for 61.7% of total trade, highlighting its dominant role as Nepal’s largest trading partner. Nepal’s exports to India surged by 156.7%, driven largely by soybean oil, noodles, jute goods, and cardamom, while imports from India grew at a modest 7.5%. This helped reduce the bilateral trade deficit with India by 8.6%, giving some relief to Nepal’s economy.

In contrast, Nepal’s trade with China showed a worrying imbalance. Imports from China rose by 14.1%, but exports collapsed by 65.2%, shrinking China’s share of Nepal’s total trade to 16.8%. The trade deficit with China widened by 14.6%, fueled by high imports of machinery, electronics, and manufactured goods, while exports of carpets, handicrafts, and garments suffered severe declines.

Trade with other countries also expanded by 17.3%, signaling that Nepal is diversifying modestly beyond its two biggest partners. Still, India remains overwhelmingly dominant, while China’s declining share highlights both structural export weaknesses and logistical challenges at northern trade routes.