This is a major shift in trend, particularly a decline in trade-deficit was not recorded even when Nepal enjoyed a double-digit growth in exports during the hay days of 1996 trade treaty, said an official at the Ministry of Commerce and Supplies.[break]
Data shows Nepal´s total trade-deficit with India stood at Rs 52.33 billion at the end of first quarter of 2011-12 whereas it was Rs 53.19 billion in the same period in 2010-11. "Trade-deficit with India has declined by a net 1.6 percent. This is a major development," reads the latest trade report that Nepal Rastra Bank (NRB) released this week.
The good news is that such a drop in trade-deficit has been recorded largely due to better exports. Otherwise, data shows imports from India have continued to grow despite efforts to discourage imports.
The rosy picture surfaced mainly because Nepal recorded a sharp growth in exports of jute products, zinc sheet, textiles, copper wire rod, wire and cardamom, among others, to India.
Data shows exports of zinc grew by 82 percent and crossed over Rs 1.57 billion, becoming the largest export commodity from Nepal to India during the first quarter of this fiscal year. Exports of textiles too grew by around 48 percent and hit Rs 1.12 billion, becoming the second largest export commodity to India.
Jute products, a traditional export item from Nepal, also grew by well over 13 percent and touched Rs 1.09 billion during the quarter, becoming the third largest export commodity to India.
Copper wire rod and cardamom recorded a robust growth in exports although the turnover remained less than half a billion rupees. Export of wire that jumped by around 80 percent crossed over Rs 548 million.
Data further shows halving of import of M S Billet, a raw material for iron rod industry, over 15 percent drop in imports of vehicles and spare parts, and over 58 percent dip in imports of hot rolled sheet in coil, which together brought down imports growth rate sharply, also contributed in the decline of trade-deficit.
Despite such a positive outlook in Nepal-India trade, the country failed in containing overall trade gap because exports to third countries continued to decline whereas imports from them soared.
According to NRB, Nepal´s exports to other countries declined by 1.3 percent to Rs 6.46 billion whereas imports from them increased by 23.4 percent to Rs 36.35 billion.
Exports to other countries dipped mainly because products like pulses, handicrafts, leather goods failed to retain their markets. Imports of gold (Rs 5.39 billion), crude soybean oil (Rs 3.07 billion), chemical fertilizers (about Rs 1 billion), electrical goods (Rs 2.35 billion), and other machinery and parts (Rs 1.82 billion) increased from other countries.
As this caused trade gap with other countries to soar by well over 30 percent and touched almost Rs 30 billion, country´s overall trade-deficit jumped by 8 percent to Rs 82.23 billion.
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