Nepal Foreign Trade Growth Rises in First Half of the FY

22nd January 2026, Kathmandu

Nepal foreign trade growth has recorded a notable expansion in the first six months of the current fiscal year 2082/83, reflecting increased economic activity and a surprisingly strong export performance. According to the latest data released by the Department of Customs on Magh 8, 2082 (January 22, 2026), the country conducted total foreign trade worth 10.81 trillion rupees (108.1 kharba) during the review period. This represents a 17.36 percent increase compared to the 9.21 trillion rupees recorded during the same period of the previous fiscal year.

Nepal Foreign Trade Growth

The rise in overall trade volume indicates a gradual recovery in the external sector of Nepal. While the increased demand for industrial raw materials and fuel drove import figures higher, it was the sharp rise in exports that emerged as the most significant highlight of the half-yearly report.

Imports Remain the Dominant Trade Component

Despite the focus on exports, imports continue to be the primary driver of the foreign trade of Nepal. During the first six months of the current fiscal year, imports increased by 14.18 percent, reaching a total of 9.39 trillion rupees (93.9 kharba). This growth reflects sustained domestic demand across several key sectors:

Industrial Raw Materials: Increasing demand as factories return to full capacity.

Fuel and Energy: Higher consumption of petroleum products and coal for construction and transport.

Capital Goods: Machinery and equipment required for the ongoing hydropower and infrastructure projects.

Consumer Electronics: A steady rise in the import of smartphones and household appliances.

The heavy reliance of Nepal on imports for both daily consumption and industrial production continues to exert significant pressure on the trade balance and foreign exchange reserves of the nation.

Significant Surge in Export Performance

On a more positive note, exports recorded a massive surge during the review period. The exports of Nepal rose by an impressive 43.76 percent, reaching 1.42 trillion rupees (14.2 kharba). This sharp increase is one of the highest growth rates recorded in recent years and highlights improvements in the competitiveness of export-oriented industries.

Key drivers of this export growth include:

Electricity Exports: A substantial increase in power sales to India through the cross-border transmission lines.

Processed Agricultural Goods: Stronger demand for Nepali tea, large cardamom, and processed ginger in international markets.

Refined Oils: Re-exports of refined soybean and palm oil, which continue to find a market in neighboring regions.

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Handicrafts and Textiles: Growth in the high-value carpet and pashmina sectors.

This surge is a positive signal for the economy, as it supports foreign currency earnings and helps in diversifying the narrow export base of the country.

The Challenge of a Widening Trade Deficit

Despite the record-breaking rise in exports, the absolute volume of imports is so high that the trade deficit of Nepal continued to widen. The trade deficit increased by 10.15 percent, reaching 7.97 trillion rupees (79.7 kharba) in the first six months of the current fiscal year. In the same period last year, the deficit stood at 7.23 trillion rupees.

This persistent gap underscores the structural challenges within the economy. While exports are growing at a faster percentage rate, the base value of exports (1.42 trillion) is still far too small to offset the massive volume of imports (9.39 trillion). For every 1 rupee of goods exported, Nepal currently imports nearly 6.6 rupees worth of goods.

Economic Implications and Policy Focus

Economists view this strong export performance as a critical window of opportunity. If the government can maintain this momentum through favorable trade policies and improved logistics, Nepal could begin to bridge its structural trade gap.

Addressing the imbalance requires several long-term strategies:

Value Addition: Moving from exporting raw agricultural products to finished, packaged goods.

Energy Transition: Reducing the fuel import bill by incentivizing the use of domestic electricity for transport and cooking.

Import Substitution: Encouraging the domestic production of cement, steel, and food grains to reduce reliance on foreign markets.

Logistics Improvement: Utilizing the newly signed “Advance Export Data Agreement” with India to reduce the time and cost of cross-border trade.

Conclusion

Overall, the Nepal foreign trade growth for the first half of 2082/83 presents a mixed but cautiously optimistic picture. The 43 percent surge in exports offers a ray of hope for a more balanced external sector, but the rising import bill and a trade deficit approaching 8 trillion rupees remain formidable challenges.

Moving forward, the ability of the nation to sustain this export momentum while managing the growth of imports will be the ultimate test for the trade policies of Nepal. As the country moves toward the second half of the fiscal year, stakeholders and policymakers will be looking for ways to ensure that this growth translates into long-term economic resilience and job creation.

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