Nepal’s exports surged to an all-time high in the fiscal year 2024/25, buoyed largely by a sharp increase in shipments of edible oils, particularly soybean, sunflower and palm oil, to India. According to the Department of Customs, exports, excluding electricity and IT-related services which do not move through customs points, jumped by 82 percent, reaching Rs 277.03bn. This marks a significant recovery after two sluggish years, when annual exports hovered around Rs 150bn.
The record-breaking surge was almost entirely driven by oil products. Soybean oil alone accounted for Rs 106.79bn, while sunflower oil exports contributed Rs 12.32bn. Together, edible oils made up nearly 44 percent of Nepal’s total exports in the last fiscal year. This spike helped raise exports’ share in Nepal’s foreign trade from 8.73 percent in 2023/24 to 13.31 percent in 2024/25.
While the numbers are encouraging, the underlying composition of exports paints a worrying picture. The export boom seen this year is not driven by domestic value-added production but rather by processing imported crude oil from third countries and re-exporting the refined products to India. This makes the growth highly contingent on India’s trade policy, especially its preferential import quotas for certain Nepali products.
The Solvent Extractors’ Association of India (SEA) earlier in February urged the Indian government to impose restrictions on edible oil imports from Nepal and other SAARC nations. Writing a letter to Prime Minister Narendra Modi, the association alleged that these imports are violating rules of origin, sidestepping established trade norms, and causing significant harm to India’s domestic refiners, agricultural producers and revenue collection.
Responding to the industry demand, the Indian government in the last week of May, reduced the basic import duty on crude edible oils by 10 percentage points, bringing it down to 10 percent. This has made the prices of crude oil, a crucial raw material for the edible oil industry, cheaper, enabling oil refineries to bring down their prices, further increasing their competitiveness. Experts say the decision will make edible oil produced domestically more competitive in the Indian markets, hitting Nepal’s exports. Meanwhile, traditional export products such as carpets, pashmina, garments, felt goods and thread remained stagnant during the review year, while exports of iron and steel products, previously a top export, declined.
Trade deficit widens six percent
Despite the export rise, Nepal’s trade deficit widened to Rs 1527,09bn in 2024/25, as imports also climbed by 13.25 percent to Rs 1,804.12bn. Petroleum products dominated imports once again, accounting for Rs 274.27bn. The government collected Rs 115.24bn in revenue from petroleum imports alone. The trade deficit with India stood at Rs 846.51bn, and with China, it reached Rs 303bn. During 2024/25, Nepal imported Rs 1071.19bn worth of goods from India but exported merchandise worth only Rs 224.69bn. Imports from China totaled Rs 341.1bn, while exports were worth a mere Rs 2.63bn.
