Nepal is grappling with a widening trade imbalance, recording trade deficits with more than 100 countries and an annual trade gap exceeding Rs 1.5 trillion. In the first five months of the current fiscal year (FY) 2025/26, the country traded with around 150 nations but ran trade deficits with 115 of them, while maintaining surpluses with only 33 countries.
According to the Department of Customs, Nepal’s total foreign trade deficit from mid-July to mid-December reached Rs 649.68 billion. During this period, imports stood at Rs 766.18 billion, while exports were limited to Rs 116.50 billion.
India remained Nepal’s largest trading partner, followed by China, with trade volumes with both countries running into hundreds of billions of rupees.
Trade with Neighbouring and SAARC Countries
Nepal recorded a trade deficit of Rs 339.22 billion with India, importing goods worth Rs 434.64 billion and exporting Rs 95.42 billion. With China, the deficit stood at Rs 163.26 billion, as imports reached Rs 163.73 billion while exports were negligible at Rs 46.68 million.
Among SAARC countries, Nepal posted trade deficits with Bangladesh, Sri Lanka, Pakistan, Afghanistan and Bhutan. Maldives was the only SAARC nation where Nepal enjoyed a trade surplus, importing goods worth just Rs 73,000 while exporting Rs 3.855 million.
Trade with Other Asian and Gulf Countries
Nepal also faced trade deficits with several Asian economies, including Japan, Malaysia, Singapore and South Africa. In the Gulf region, imports from the UAE alone exceeded Rs 23.45 billion, while exports remained below Rs 1 billion. Trade deficits were also recorded with Oman, Israel and Iran.
Trade with the US, Europe and the Americas
Nepal imported goods worth over Rs 10.35 billion from the United States while exporting Rs 7.42 billion. Trade deficits were also recorded with the United Kingdom, Canada, Argentina, Brazil and most European countries, including France and Italy. Germany was an exception where exports nearly matched imports.
Nepal also ran trade deficits with conflict-affected countries such as Ukraine and Russia.
Deficits with Smaller Economies
Customs data show that Nepal faces trade deficits even with smaller and economically weaker nations. For example, Nepal imported goods worth over Rs 20 million from Sudan without exporting anything. Similar deficits were recorded with countries such as Yemen, Tunisia, Zimbabwe, Uganda and Kenya.
Countries with Trade Surpluses
Despite the overall imbalance, Nepal recorded trade surpluses with a limited number of countries, including Maldives, Denmark, Norway, Sweden, Croatia, Jamaica, Panama, Romania, Seychelles, Somalia, Uruguay and Iraq, among others.
Economists warn that the persistent and widespread trade deficit underscores Nepal’s structural dependence on imports and highlights the urgent need to boost export capacity and diversify international trade.
