The trade deficit widened significantly in the first four months of the fiscal year 2025/26, driven by a sharp rise in imports and only modest export performance, according to the latest foreign trade data released by the Department of Customs.
Nepal recorded a trade deficit of Rs 515.95bn between mid-July and mid-November, an 11.99 percent increase compared to the Rs 460.71bn deficit during the same period last fiscal year. The expansion reflects the country’s growing dependence on imported goods and its struggle to boost export competitiveness.
During the review period, Nepal imported goods worth Rs 609.45bn, while exports amounted to only Rs 93.49bn. Total foreign trade reached Rs 702.94bn, up from Rs 566.05bn in the corresponding period last year.
Although Nepal engaged in trading activities with more than 140 countries over the four-month period, it managed to maintain a trade surplus with only 28 of them. The largest surplus was recorded with Denmark. Nepal exported goods worth Rs 324.41m to the Scandinavian nation while importing products worth only Rs 49.99m, resulting in a surplus of Rs 274.41m. Major export items included tea, pasta, light snacks, pet food, felt products, and pullovers, while imports from Denmark consisted mainly of machinery, ophthalmic instruments, pharmaceutical raw materials, and animal feed.
Other notable countries with which Nepal posted trade surpluses were Romania (Rs 67.85m), Sweden (Rs 25.08m), Niger (Rs 17.34m), Iraq (Rs 17.31m) and the Seychelles (Rs 11.16m). Surpluses with the remaining countries were below Rs 10m.
On the deficit side, Nepal’s largest trade gap—by a wide margin—was with India, its largest trading partner. Imports from India totaled Rs 337.92bn during the review period, while exports reached only Rs 76.5bn, resulting in a deficit of Rs 261.41bn.
Nepal also experienced substantial deficits with China (Rs 132.27bn), Argentina (Rs 34.72bn), and the United Arab Emirates (Rs 21.56bn), reflecting the high volume of crude oil, manufactured goods, machinery, and industrial inputs sourced from these economies.
The widening deficit highlights Nepal’s limited export capacity and rising import dependency. Experts say it is high time the country prioritized industrial productivity, export diversification, and more competitive trade policies to narrow the growing imbalance.
