In a worrying trend, trade deficit continues to widen

Kathmandu, Nov. 27

Nepal's trade deficit with India has increased by Rs. 445.1 billion in the last five years to reach Rs. 1044.9 billion in the Fiscal Year 2021/22.

In the Fiscal Year 2016/17, Nepal's trade deficit with India was Rs. 599.7 billion with the export of Rs. 41.6 billion and import of Rs. 641.4 billion. The imports from the southern neighbour have climbed to Rs. 1200.1 billion while exports reached Rs. 155.2 billion in the last fiscal year.

The total trade deficit of Nepal in 2021/22 was Rs. 1.7 trillion.

Nepal's major imports from India are petroleum products (diesel, petrol and liquified petroleum gas), vehicles and their parts, motorcycles, ceramics, iron and steel, crude soyabean oil, crude sunflower oil and sugar. Nepal imports petroleum products worth Rs. 116 billion.

Similarly, major exports to India are soyabean oil, palm oil, woven fabrics, carpets and textiles, large cardamom, sunflower seed and oil, juice, yarn, tea and animal food.

Likewise, another immediate neighbour, China, is another trade partner with which Nepal witnesses the second largest trade deficit of Rs. 263.9 billion in 2021/22. Five years ago, the size of trade deficit was less than half of the last fiscal, Rs. 128.1 billion. But it is surprising that Nepal's export to China has dropped by 52.5 per cent over the period – the goods export from Nepal to China was Rs. 170.14 billion in 2016/17 but it has tumbled to Rs. 80.87 billion last year.

Meanwhile, import from China has increased to Rs. 264.7 billion from Rs. 129.8 billion. China shut the borders with Nepal citing the coronavirus pandemic and has promised to ease the bilateral trade with its neighbour only recently. While goods from China continue to flow into the country, the producers and exporters from Nepal face a number of hurdles in sending goods there. Especially, the customs in Rasuwagadhi and Tatopani witnessed zero exports for a long period. There were no exports from these two customs points last year while China sent goods worth Rs. 26.6 billion through Rasuwagadhi and Rs. 14 billion from Tatopani border points to Nepal.

Other countries that top the list of Nepal's trade deficit last year include Indonesia, the United Arab Emirates (UAE), Argentina, the United States of America, Australia, Ukraine, Malaysia and Brazil.

They included India, China, UAE, France, Indonesia, Argentina, Thailand, South Korea, Canada and Malaysia in 2016/17.

Nepal's export to Argentina stands at meagre Rs. 1.4 million while imports are worth Rs. 39.6 billion. 

Published in The Rising Nepal daily on 28 November 2022.