Scope Of Export Trade

Nepal Rastra Bank has recently made public statistics on Nepal's exports in the first two months of the current Fiscal Year 2024/25 - mid-July to mid-September. According to the statistics, polyester yarn and thread have retained their position as the country's top exports during that period. Plastic board and juice have made inroads into the list of top five exports, replacing cardamom and readymade garments from the list of the same period last FY 2023/24.

Also included in the exports are yarn and thread worth Rs. 2.012 billion – an increase of 3.9 per cent from the same period last fiscal. Woollen carpet has climbed two position higher to snatch the second largest export spot this year with 8 per cent share in total export and Rs. 1.99 billion in amount, up from Rs. 1.5 billion last year, and 120 per cent up compared to the same period in FY 2022/23. Likewise, worth Rs. 1.51 billion and holding six per cent share, plastic board has leapfrogged to the third largest export position from seventh largest last year. What's more, zinc sheet and juice hold the fourth and fifth berths respectively, though their exports have declined by 30.1 per cent and 0.4 per cent respectively compared to the previous year.

Other top 10 export items are tea, readymade garments, jute products, oil cakes and pashmina. Furthermore, cardamom, ayurvedic medicine, textiles, shoes and sandals, palm oil, noodles, ginger, rosin, herbs and copper wire rod have made it to the top 20 exports list, as have herbs, handicrafts and bran. With the exception of oil cakes, pashmina, ayurvedic medicine, shoes and sandals, noodles and rosin, export of the remaining 15 products has gone down. 

During the two-month period, Nepal exported goods worth Rs. 25.09 billion to 94 countries against the imports of Rs.  262. 54 billion from 113 countries, with India, the United States (US), Germany, the United Kingdom (UK) and the United Arab Emirates (UAE) being the top export markets in descending order. Likewise, top import sources include India, China, Ukraine, Australia and Qatar. Nepal exported goods worth Rs. 15.98 billion to India, Rs. 3.22 billion to the US, Rs. 871 million to Germany, Rs. 684 million to the UK and Rs. 412 million to the UAE. Among the top ten export destination countries, Nepal trade balance is positive only with the UK by Rs. 34.7 million.

What can be gleaned from the statistics is that Nepal remains a heavily import-dependent country. The gap in the import-export is likely due to our low productivity, sluggish pace of industrialisation, lack of infrastructure to facilitate trade environment, dearth of value adding innovation, among other factors. Despite having export prospects in many sectors, such as agriculture and electricity, we have fallen short in tapping them to the fullest.  

That said, electricity export, which has persistently been on upward trajectory for a couple of years now, has raised the hope of plugging the deficit, albeit to some extent. According to a 2021 World Bank report, Nepal has the potential to increase its exports twelve-fold, to USD 9.2 billion. Though the country has made significant strides in the number of products it has exported, its trade deficit has continued to remain stubbornly high. The good news, however, is that the import of petroleum products fell by around Rs. 15 billion (over 4 per cent) in the last fiscal. The uptick in electricity generation and the subsequent rise of electricity vehicles (EVs) in popularity has made this happen. Things will improve further should electricity production continue going north.