Nepal has significant potential in export trade but has not made sufficient efforts to tap it. By identifying new sectors, the country can boost exports. Recently, soybean oil emerged as a promising product, with exports worth Rs 106.79 billion to India and Australia in just one year—contributing to an 82% overall export growth. Prime Minister KP Sharma Oli hailed this as a historic milestone, with exports rising from Rs 124 billion to Rs 277.03 billion in a single Fiscal Year (FY). However, this growth’s sustainability is questionable, as much of the oil relies on imported raw materials rather than domestically grown soybeans. In reality, Nepal has not actively promoted export growth or import substitution. Many locally producible goods, like fruits, vegetables and grains, continue to be imported. Supporting domestic production and making locally produced goods affordable could reduce imports and boost consumption. Nepal’s products are often uncompetitive internationally due to high costs. To lower prices, production must scale up significantly—like China’s mass production model. Instead of exporting labor, Nepal should focus on expanding domestic production and exports through long-term strategic planning.
Nepal has huge potential to produce unique goods and sell them abroad—especially handicrafts, tea, cardamom, fiber, churpi (hardened cheese), and herbal products. Although soybean oil has recently boosted exports, this may not be sustainable in the long run, as the oil is currently made from imported raw materials. If large quantities of soybeans were produced domestically and then processed into oil for export, the situation would be quite different. Therefore, Nepal should focus on producing value-added goods that can boost exports. Government subsidies for exports have played a role to some extent. If Nepal produces goods based on its own raw materials and exports them, it could positively contribute to the national economy. The cement industry has shown such potential. Due to the availability of quality raw materials, Nepal can produce high-grade cement. Focusing on sectors with potential based on local resources and products where Nepal has a comparative advantage could help reduce the trade deficit. Nepal has high-quality medicinal herbs, which can be used to produce and export pharmaceuticals. Similarly, agro-based products and other derivative goods can be produced locally. For instance, Thailand exports a wide range of packaged foods made from mangoes, durians, and other fruits. Nepal too should consider such opportunities.
Tea production stops with onset of winter
It is worth recalling that Nepal once established a rice export company. Nowadays, however, the country struggles even to meet its own grain demands. Instead of importing vegetables and greens, we should encourage and support local farmers. Unfortunately, farming in Nepal has come to be seen as a subsistence profession. Since hard work does not translate into sufficient returns, many have abandoned farming. This has made Nepal overly dependent on imported agricultural products. Avoiding overreliance on imports could save a significant portion of capital from flowing abroad. While it is good to celebrate increased exports, one must not overlook the fact that imports have also risen. In FY 2024/25, imports increased by 13.25 percent, rising by Rs 211.13 billion. Whereas Rs 1.592 trillion worth of goods were imported in the previous fiscal year, imports reached Rs 1.804 trillion in the current fiscal year. The largest share of imports is petroleum products. Therefore, the country must begin transitioning to electric or hydrogen-based energy alternatives. This shift could significantly reduce imports. Nepal’s total trade deficit has reached Rs 1.525 trillion. Hence, efforts must focus on reducing the trade deficit gap.
