Decline in Nepal's Foreign Trade

Nepal's foreign trade has experienced a significant decline according to the data for the fiscal years 2022/23, 2023/24, and the provisional figures for 2024/25. The total exports have decreased from NPR 157,140.7 million in 2022/23 to NPR 12,226.1 million in 2024/25, marking a sharp decline of approximately 9.6%. This decline is particularly notable in exports to India, which fell from NPR 106,686.4 million in 2022/23 to NPR 7,578.9 million in 2024/25.

Exports to China also witnessed a dramatic downturn. In 2022/23, Nepal exported NPR 1,765.8 million worth of goods to China, which dropped to just NPR 157.6 million in 2024/25. This steep decline highlights the growing challenges Nepal faces in maintaining its trade balance with China.

Meanwhile, the total imports have seen a slight decrease. The total imports fell from NPR 1,611,731.8 million in 2022/23 to NPR 128,377.1 million in 2024/25. There was a 4.4% reduction in imports from India, while imports from China increased by 12%, indicating China's strengthening role as a major trade partner for Nepal.

Overall, Nepal's trade deficit showed a slight improvement in 2024/25. The trade deficit, which stood at NPR -1,454,591.1 million in 2022/23, decreased to NPR -116,151.0 million in 2024/25. However, the trade deficit with India narrowed by 3.7%, whereas the deficit with China expanded by 13.3%.

India continues to be Nepal's primary trade partner, accounting for 60.6% of Nepal's total trade. In contrast, China's share of Nepal's total trade has increased to 17.6%, reflecting a rise in trade activities between the two countries.

The export-to-import ratio has also worsened, dropping from 9.7% in 2022/23 to 8.7% in 2024/25. This decline underscores Nepal's growing dependence on imports and the challenges it faces in boosting its export capacity.

To address this trade imbalance, Nepal needs to implement strategic measures to enhance its export capabilities. Increasing industrial production, diversifying exportable goods, and exploring new markets are essential steps that could help reduce Nepal's trade deficit and strengthen its economic position.