Nepal’s Imports on the Rise: Petroleum Products Dominate, Trade Deficit Widens
Author
Dipesh Ghimire
In the first six months of the fiscal year 2024/25, Nepal’s total imports exceeded NPR 1.32 trillion, with petroleum products taking the largest share. According to recent data from Nepal Rastra Bank, significant imports include vehicles, machinery, industrial raw materials, edible oils, medicines, and telecommunication equipment.
Despite efforts to reduce dependency on imports, Nepal's reliance on foreign goods remains strong, leading to an increasing trade deficit and pressure on foreign exchange reserves.
1. Petroleum Products Lead Imports, Nepal’s Energy Dependency Still High
Petroleum products remain Nepal's top import category, with an import value of NPR 132.06 billion in the first six months of the fiscal year.
Due to the lack of alternative energy sources, Nepal continues to depend on petroleum imports. While hydropower development is ongoing, electricity production is insufficient to replace fuel consumption, and the adoption of electric vehicles is still in its early stages.
2. High Demand for Vehicles and Machinery
Nepal has spent a significant amount on importing vehicles, spare parts, and machinery:
Vehicles & Spare Parts – NPR 42.84 billion
Machinery & Equipment – NPR 36.60 billion
With public transportation infrastructure still underdeveloped, demand for private vehicles remains high. Additionally, Nepal relies on imported machinery for industrial, construction, and manufacturing purposes.
3. Dependency on Industrial Raw Materials for Manufacturing and Construction
The construction and manufacturing industries heavily depend on imported raw materials. Key imports include:
Ferrous products (Sponge Iron) – NPR 25.72 billion
Hot Rolled Sheet in Coil – NPR 16.64 billion
Coal – NPR 11.62 billion
These materials are essential for steel production, construction, and industrial activities, indicating a need to explore domestic alternatives for production.
4. Rising Imports of Food and Agricultural Products
Despite being an agricultural economy, Nepal continues to import large volumes of essential food items:
Rice/Paddy – NPR 18.97 billion
Crude Soybean Oil – NPR 24.41 billion
Edible Oil – NPR 13.87 billion
Vegetables – NPR 8.43 billion
The high import of agricultural commodities highlights Nepal’s struggle to achieve self-sufficiency in food production. The country must enhance domestic agricultural productivity through improved technology, irrigation, and commercialization.
5. High Spending on Medicines and Telecommunications
Nepal has also spent significantly on medical supplies and telecommunication equipment:
Medicines – NPR 23.09 billion
Telecommunication Equipment & Parts – NPR 20.96 billion
With Nepal’s pharmaceutical industry still in its early stages, most medicines are imported from India and other countries. Similarly, the rapid expansion of telecommunication infrastructure and digital services has led to increased imports of telecom equipment.
6. Lower Gold Imports, But High Spending on Chemicals and Electrical Goods
While gold imports stood at NPR 8.27 billion, other industrial and electrical materials accounted for larger expenses:
Chemicals – NPR 8.57 billion
Electrical Equipment & Goods – NPR 15.76 billion + NPR 10.41 billion
The import of chemicals and electrical goods indicates Nepal's growing industrial needs and infrastructure development. However, the country needs to focus on producing these materials locally to reduce dependency.
7. Trade Deficit Worsens, Export Promotion Needed
Nepal’s heavy reliance on imports continues to widen the trade deficit, as the country’s exports remain minimal. To address this, Nepal must:
Promote domestic agricultural and industrial production
Increase hydropower production and shift towards electric energy
Enhance self-sufficiency in essential sectors such as medicine and food processing
Boost exports through technology, services, and value-added industries
A well-implemented import substitution strategy could help balance Nepal’s trade. Additionally, focusing on domestic industries, agriculture, and energy production will be crucial to achieving economic stability.
