Nepal’s trade deficit rose by 6 percent in the fiscal year (FY) 2024/25, even as the country posted an impressive 81.80 percent surge in export earnings. According to the Department of Customs (DoC), the trade deficit stood at Rs 1.527 trillion, up from Rs 1.440 trillion in FY 2023/24—reflecting an additional net outflow of Rs 87 billion in merchandise trade over the year.
While exports reached Rs 277.03 billion, imports rose at a significantly higher pace, totaling Rs 1.804 trillion, marking a 13.25 percent increase. The overall trade volume, a combination of exports and imports, climbed by 19.24 percent to Rs 2.081 trillion. This indicates that the rise in imports overshadowed the gains made through export growth.
Trade expert and former commerce secretary Purushottam Ojha attributed the widening trade deficit to Nepal’s overdependence on imported raw materials and the lack of value-added production domestically. “The country has not yet introduced strong programs to stimulate high-value exports of Nepali goods and services,” Ojha stated.
A significant contributor to the deficit was the import of petroleum products, which alone surpassed total export earnings. Nepal spent over Rs 325 billion on petroleum imports, exceeding the country’s entire export income by Rs 49.11 billion. This alone was a major blow to the trade balance.
However, Nepal did achieve net trade gains in a select number of product categories. For example:
- Woolen carpets: Nepal exported Rs 12.25 billion, while imports stood at only Rs 577.8 million, securing a substantial trade surplus.
- Vegetables and fruits: The country exported Rs 7.74 billion worth, compared to imports of Rs 2.38 billion, earning a net Rs 5.35 billion.
- Coffee, tea, and related products: Export income hit Rs 13 billion, with imports of Rs 4 billion, resulting in a net surplus of Rs 9 billion.
These gains, though meaningful, were not sufficient to offset the massive import bills, especially in fuel and industrial goods. The growing trade deficit highlights the urgent need for Nepal to diversify its export base, invest in value-added industries, and reduce reliance on costly imports, particularly petroleum and industrial raw materials.
