Key Sectors Driving Nepal’s Export Performance in FY 2082/83

Nepal’s export sector has shown remarkable momentum in FY 2082/83, with growth nearly doubling by 95.7% in mid-August 2025/26 compared to the same period last year. This surge is not the result of one factor alone but rather a combination of traditional strengths and new opportunities. Traditional products such as handmade carpets, garments, pashmina, and handicrafts continue to dominate, particularly in European markets like Germany, where Nepal has recorded its largest trade surplus. Alongside these, agro and herbal exports—including orthodox tea, coffee, cardamom, ginger, and medicinal plants—are gaining popularity in South Asia and Europe, aligning with rising global demand for organic and natural products. A transformative driver of recent performance has been hydropower exports to India, marking a shift toward higher-value, sustainable exports that diversify Nepal’s trade base. Light manufacturing, such as cement, processed foods, and semi-finished iron and steel products, has also started contributing, albeit modestly, reflecting the gradual capacity of Nepal to move into industrial exports. Meanwhile, the IT and digital services sector, though still underreported in official statistics, is emerging as a promising frontier as Nepali youth increasingly participate in outsourcing and global freelancing markets.

Despite these achievements, challenges remain. Exports are still far smaller than imports—Rs. 23.9 billion vs. Rs. 143 billion by mid-August—keeping the trade deficit wide. Moreover, the export base is narrow and concentrated in limited products and markets, which makes it vulnerable to external shocks and policy shifts in destination countries. To make this growth sustainable, Nepal must focus on value addition, market diversification, and policy support for emerging sectors like hydropower and IT. Strengthening infrastructure, ensuring consistent supply chains, and improving trade facilitation will be key to turning the recent rebound into long-term structural transformation.