The current macroeconomic and financial situation report released by Nepal Rastra Bank gives an indication that Nepal’s foreign trade is lately moving on encouraging path. Making an assessment of the first two months of the current fiscal year, the report of the central bank shows a remarkable surge of export as well desirable decline in import. As morning shows the day, we can hope that this fiscal year is going to bring good results for the trade situation of the country beset by precipitous trade deficit. If this positive trend seen right at the onset of the new fiscal year continues steadily, it augurs well for bringing foreign trade back to favourable balance and making desirable progress in the days to come.

According to the NRB report, Nepal’s merchandise export increased by 25.9 per cent to Rs. 18.5 billion in the first two months of the current fiscal year. In the same period last year, this increase was at 8 per cent. Signals are positive on the import front, too. The volume of merchandise import in this period decreased by 1.2 per cent while it had increased by 38.5 per cent last year. Nepal has dominating share of foreign trade with India, and for that matter, trade deficit with the southern neighbor is immense. But the indications seen in the initial two months of the current fiscal year show that this situation will change for the better in the future. The NRB report says that export to India increased by 46 per cent in this period though the export to China decreased by 17.4 per cent.

As huge chunk of national capital, including remittance earnings, is invested in unproductive sectors, Nepal has lagged behind in export trade. Nepalis also have the tendency of consuming imported items, including food. A lot of money also goes out to import petroleum fuels. Nepal does have potential of producing and exporting various niche products. Government’s appropriate policy priorities and investment of national capital on productive sectors can change the balance in national favour by attaining self-reliance, increasing export and substituting import. For instance, massive investment in hydropower can make Nepal energy self-reliant and opens way for power export. In addition, the dependency on imported petroleum will also decline as a result.

Nepal once used to be self-sufficient on food and agricultural items. Now it is a food importer. Besides, we are seasonally importing electricity from India despite our huge potential in hydropower generation. Commercialisation of agriculture can make a big difference in attaining self-reliance and exporting potential items. Nepal’s tea, coffee, ginger, cheese and host of other agricultural items have export potential. There is a huge demand of lamp butter in China. Yarsa gumba and items made from it can establish its own brand. Himalayan medicinal herbs can also emerge as export items from Nepal. But we should avoid exporting raw herbs in extremely low price and later import processed and refined items on higher price. Instead, we should make and export our own refined products.