Nepal’s Foreign Trade Surges with Record-Breaking Export Growth in FY 2024/25

Kathmandu, July 9 – Nepal has witnessed a significant shift in its foreign trade landscape during the first eleven months of the fiscal year 2024/25, with exports soaring by 77.8% compared to the same period last fiscal year. According to data released by the Nepal Rastra Bank, total exports surged to Rs. 247.57 billion, a historic high, reversing the previous year’s declining trend.

Exports to India Lead the Growth

A closer examination reveals that exports to India were the primary driver of this impressive growth. During the first eleven months of 2024/25, Nepal exported goods worth Rs. 200.89 billion to India, up a staggering 112.6% from Rs. 94.52 billion in the same period of 2023/24. This surge not only offset the previous year’s 4.5% decline but also more than doubled the export volume.

This unprecedented rise is attributed to increased demand for electricity, refined palm oil, cardamom, and other key exports. Improved trade logistics and favorable bilateral agreements between Nepal and India also appear to have facilitated the sharp boost.

Mixed Trends with China and Other Countries

Exports to China, which had jumped 57.7% last fiscal year, showed a much more modest rise of 3.0% this year, reaching Rs. 2.48 billion. Similarly, exports to other countries experienced a mild rebound, increasing by 4.4% to Rs. 44.19 billion after a 1.7% dip in the prior year. While the growth is positive, the figures still reflect Nepal’s continued overdependence on the Indian market.

Imports Continue to Rise, But at a Controlled Pace

On the import side, Nepal spent Rs. 1.64 trillion in the first eleven months of 2024/25 — a 13.1% increase compared to Rs. 1.45 trillion in the same period of 2023/24. Although still substantial, the growth rate is moderate compared to previous years, suggesting a partial easing of import pressure.

Key imports included petroleum products, vehicles, machinery, electronics, and food items. However, the trade deficit remains wide, underlining Nepal’s long-standing structural imbalance in international trade.

Trade Deficit Narrows in Relative Terms

Despite rising imports, the significant surge in exports has had a stabilizing impact on Nepal’s trade balance. While the absolute trade deficit remains high, the relative growth in exports has improved the export-import ratio. This development is particularly encouraging for policymakers aiming to reduce dependency on foreign goods and boost domestic production.

Policy Implications and the Road Ahead

The government and the central bank are likely to view this export boost as a validation of recent efforts to promote export-oriented industries. The significant growth to India also signals the importance of maintaining stable diplomatic and trade relations with the southern neighbor.

However, Nepal must diversify its export base beyond India and low-value products. Investments in industrial productivity, export incentives, infrastructure, and quality control mechanisms will be crucial for sustaining and expanding this momentum.