Woolen Carpet and Readymade Garments Exports Decline, Soybean Oil Drives Growth

Nepal’s export performance for the first two months of FY 2025/26 reveals a mixed trend — while total exports surged by 88.6%, several traditional export sectors such as woolen carpets and readymade garments recorded declines. According to the Nepal Rastra Bank (NRB) Mid-September 2025/26 report, the overall growth was driven primarily by the massive rise in soybean oil exports, which dominated the export basket with a 43.2% share of total exports.

Soybean Oil Remains Nepal’s Export Engine

Soybean oil continued to be Nepal’s top export commodity, reaching Rs. 20.42 billion in just two months — maintaining its dominant position despite a stable growth rate compared to the previous fiscal year. The edible oil sector, including palm oil (Rs. 1.36 billion, up 318.4%), contributed significantly to Nepal’s export boom. Together, these two commodities accounted for nearly half of Nepal’s total export earnings during the review period.

Decline in Traditional Exports

In contrast, the report highlights a drop in traditional and manufacturing-based exports, reflecting ongoing structural challenges.

• Woolen carpet exports fell by 20.7%, totaling Rs. 1.58 billion, down from Rs. 1.99 billion in the same period of FY 2024/25.

• Readymade garments also slipped slightly to Rs. 1.06 billion, compared to Rs. 1.02 billion previously.

• Other long-standing products like tea (-37.2%) and zinc sheets (-77.6%) experienced sharp declines due to reduced demand in key international markets and competitiveness issues in pricing.

Rising Sectors and Diversification

Despite the contraction in traditional exports, several agro-industrial and niche products recorded impressive growth.

• Jute goods surged 61.1% to Rs. 1.61 billion, continuing their upward trend.

• Cardamom (+43.9%), herbs (+44%), noodles (+45.7%), and pashmina (+13.1%) showed solid performance, signaling diversification into processed and value-added exports.

• The textile industry grew 19.9%, reflecting gradual recovery in production and export orders.

Macro Context and Outlook

According to NRB, the overall export value reached Rs. 47.32 billion, with top 20 commodities accounting for Rs. 35.68 billion (75.4% of total exports). This export expansion coincides with a period of macroeconomic stability — foreign reserves climbed to Rs. 2.88 trillion (USD 20.41 billion), remittances rose 33% to Rs. 352 billion, and inflation eased to 1.87%, providing a favorable backdrop for trade.

Economists, however, caution that the export structure remains highly concentrated, with growth driven largely by a few re-export commodities like soybean and palm oil. To sustain long-term growth, Nepal must strengthen industrial competitiveness, product diversification, and market expansion strategies, while improving logistics and export financing systems.