Nepal’s Foreign Trade in Shrawan: Imports Surge, Deficit Widens

Kathmandu – Nepal’s foreign trade in the first month of the current fiscal year 2082/83 (mid-July to mid-August 2025) revealed a familiar but deepening trend: soaring imports and sluggish exports, leaving the country with a widening trade deficit.

According to the Department of Customs, Nepal imported goods worth Rs. 1.43 trillion during Shrawan while exports stood at only Rs. 239.32 billion. The imbalance resulted in a staggering trade deficit of Rs. 1.19 trillion within a single month, once again underscoring the structural weaknesses in the country’s external trade profile.

Heavy Reliance on Fuel, Fertilizers, and Food Grains

The data highlights Nepal’s overwhelming reliance on essential imports. The largest import category was mineral fuels and oils (Chapter 27), totaling Rs. 21.99 billion. Nepal, a landlocked and energy-dependent economy, has long relied on petroleum products for transportation, power generation, and household use. Rising global oil prices could magnify this burden in the months ahead.

Imports of fertilizers (Chapter 31: Rs. 6.97 billion) and cereals (Chapter 10: Rs. 4.55 billion) further indicate Nepal’s inability to achieve self-reliance in agriculture. These items are critical for food security and farming productivity, but the sheer scale of import bills raises questions about domestic policy effectiveness.

Similarly, iron and steel (Chapter 72: Rs. 11.09 billion) remained one of the biggest import groups, reflecting ongoing demand from construction and infrastructure projects. The dependence on these sectors means any slowdown in remittance-driven consumption or donor-funded development could sharply affect trade figures.

Exports Show Pockets of Growth, But Too Narrow

On the export side, animal and vegetable fats and oils (Chapter 15) emerged as the strongest performer, generating Rs. 12.31 billion, slightly offsetting high import values in the same category. Textiles and handicrafts—long regarded as Nepal’s traditional strength—also contributed positively.

Exports of man-made staple fibres (Rs. 1.07 billion), carpets (Rs. 875 million), and non-knitted apparel (Rs. 703 million) formed the backbone of Nepal’s overseas sales. Additionally, niche agro-products such as coffee, tea, and spices (Rs. 847 million) and wood and wood articles (Rs. 718 million) showed steady demand in international markets.

However, beyond these limited areas, most export chapters remain small and fragmented. For instance, furniture (Rs. 185 million), toys and sports goods (Rs. 195 million), and pharmaceutical products (Rs. 196 million) contribute little compared to the billions spent on fuel and cereals.

Trade Deficit: Only a Few Bright Spots

Of the 97 trade chapters, only a handful posted trade surpluses. Notable among them were vegetable plaiting materials (Rs. 353 million surplus), wood and wood products (Rs. 402 million surplus), and textiles made-up articles (Rs. 158 million surplus).

But these gains are dwarfed by deficits in key categories. Mineral fuels alone contributed a Rs. 21.99 billion deficit. Fertilizers (Rs. –6.97 billion), iron and steel (Rs. –10.79 billion), cereals (Rs. –4.55 billion), and vehicles (Rs. –8.01 billion) further weighed down the balance.

The overwhelming majority of categories remain negative, signaling that Nepal’s export growth—even when rising in double digits—cannot compensate for the import burden.

Customs Revenue: A Silver Lining?

Despite the deficit, the government collected Rs. 368.14 billion in customs revenue during the review month. The top revenue generators included mineral fuels (Rs. 87.25 billion), vehicles (Rs. 73.05 billion), plastics (Rs. 16.05 billion), and iron and steel (Rs. 18.97 billion).

This reliance on import duties reflects a structural challenge: the government’s fiscal health is directly tied to imports. Any future slowdown in imports could hurt public finances, making development financing more precarious.

Interpretation: What the Numbers Say

The figures expose four major structural weaknesses in Nepal’s trade economy:

1. Import Dependency: The country remains highly reliant on imported essentials—fuel, food grains, and fertilizers—leaving it vulnerable to global shocks.

2. Narrow Export Base: A handful of products—oils, garments, carpets, and spices—carry the export sector, while industrial goods remain largely absent.

3. Fiscal Dependence on Tariffs: Customs revenue continues to be a key government income source, but this model is unsustainable in the long run.

4. Balance of Payments Pressure: A deficit of over Rs. 1.19 trillion in just one month raises concerns about foreign reserves, remittance inflows, and Nepal’s ability to finance its import bill.

Experts warn that unless the government pushes aggressively for export diversification, industrialization, and agricultural self-reliance, the trade imbalance will continue to widen. Rising import bills coupled with modest exports risk not only the balance of payments but also long-term macroeconomic stability.

As Nepal heads into the rest of FY 2082/83, all eyes will be on whether policies can shift the country from a consumption-heavy, import-reliant economy towards one that is competitive in global markets.