Export diversification remains a far cry

Kathmandu, Nov. 20: Nepal's export trade is more concentrated to India and the United States of America over the period of five years – from 2017/18 to 2022/23. There were six destination countries for Nepal's top 20 exports in the first three months of 2017/18 which has shrunk to half in the same period of 2022/23.

Nepal sold its top exports in the markets of India, Turkey, USA, Bangladesh, the United Arab Emirates and Germany five years ago, but now its main markets are India, USA and Turkey. In the wake of the Indian blockade following the declaration of the new federal constitution in 2015 which happened after the devastating Gorkha Earthquake same year, the government had adopted a policy of trade diversification in both exports and imports. However, the statistics of the Department of Customs (DoC) showed that the results are otherwise.

Except the new products that are based on imported raw materials and being imported to India seeking benefits from the customs arbitrage, Nepal's export to the major destinations has remained the same. In the last few years, palm oil and soyabean oil have topped the country's export list pushing earlier 'stars' like carpets, large cardamom, tea and yarn down the list. All these products are exported to India only, and share a large portion of the overall trade – of the total export of Rs. 41.8 billion, palm oil and soyabean oil cover Rs. 10 billion.

India has the destination of 17 of the 20 largest exports in the three months of this year while USA imported carpets and textile, and felt products from Nepal, and Turkey imported yarn. Five years ago, the UAE imported telephone sets and other items, Germany carpets and textile and Bangladesh other items, apart from India, Turkey and the USA.

India is the market for almost every export of Nepal. It is buying products like juice, cardamom, tea, woven fabrics, sacks and bags, rosin, iron wire, carpets and yarn. Apart from the palm oil and soyabean oil, traditional exports of Nepal have not witnessed a significant growth over the five-year period. For example, large cardamom worth Rs. 935.4 million was exported to India in three months of 2017/18 which has increased to Rs. 1.20 billion in 2022/23.

Likewise, black tea worth Rs. 947 million was exported to India five years ago and worth Rs. 1.18 billion now. However, carpet or textile export to the USA has doubled in the five years.

Carpets and textiles worth Rs. 885.9 million were exported to the USA five years ago which has gone up to Rs. 1.81 billion this year, according to the DoC statistics. Meanwhile, yarn export to Turkey has decreased from Rs. 994.6 million to Rs. 481.9 million.