KATHMANDU: Nepal is staring at a huge trade deficit of Rs 1.3 trillion, especially due to the high reliance on foreign imports, even commodities that are easily producible locally. In the first eleven months of the contractual fiscal year, the value of imports was as high as Rs. 1.454 trillion against meager exports of Rs. 139.26 billion. The cumulative trade deficit due to this imbalance has reached Rs 1.315 trillion.
Compared to other periods, the general trend of overseas trade in Nepal is downward throughout the fiscal year. This material information has been drawn from the Department of Customs, which shows that Jestha is the peak month of import in the country, which reached Rs 150.34 billion. Both imports and exports decreased within this period, while imports decreased by 1.84 percent, exports dropped by 3.01 percent.
India remains Nepal's biggest trading partner, with imports totaling Rs 982.9 billion and exports at a significantly lower Rs 94.51 billion. This is closely followed by China as a second-largest trading partner, with imports amounting to Rs.272.81 billion. Fuel, agricultural inputs, food products, and vegetables are among the key commodities imported into the country.
Despite government incentives like imposing export subsidies of up to eight percent on cement and other items, the export sector of Nepal is yet to take off. The campaign 'Made in Nepal and Make in Nepal' has been carried out to increase domestic production and export capacity in sectors like cement, medicine, iron rods, furniture, and shoes. However, it remains inadequate to reverse the falling trend of exports and remains an economic challenge.
Ahead, Nepal will focus on protecting the domestic industries, promoting local production of products out of indigenous resources, encouraging foreign investment in export-oriented industries, and improving the quality and marketability of domestic products. All said diversification of foreign trade is an absolute requirement if the predominant trade deficit affecting Nepal has to be dealt with sustainably and reduced to make economic growth sustainable in the long run.
