Trade experts have warned that the country’s growing dependence on a single product and market leaves its export sector vulnerable to policy changes in India…reports Asian Lite News Desk
Nepal’s merchandise exports reached a record high in the fiscal year 2025-26, which ended in mid-July, but the country’s export performance is becoming increasingly dependent on edible oil products and the Indian market, raising concerns over the long-term sustainability of its trade sector.
According to annual foreign trade statistics released this week by Nepal’s Department of Customs, merchandise exports rose 13.8 per cent year-on-year to a record NPR 315.29 billion. However, the figures also revealed a growing concentration of exports in a narrow range of products destined primarily for a single market.
Refined soybean oil remained Nepal’s largest export, generating NPR 128.74 billion and accounting for 40.8 per cent of total merchandise exports during the fiscal year.
When other edible oil products are included, exports under the category of animal and vegetable fats and oils totalled NPR 148.98 billion, representing 47.3 per cent of Nepal’s total merchandise exports. Nearly half of every export rupee earned by the country came from edible oil products, almost all of which were shipped to India.
Nepal’s refined edible oil industry is heavily dependent on imported crude oil, most of it sourced from Argentina and other South American countries. The crude oil is processed in Nepal before being exported to India with value addition.
As Nepal has limited large-scale commercial soybean cultivation, its biggest export industry relies largely on imported raw materials rather than domestic agricultural production.
India continued to dominate Nepal’s export market during the fiscal year. Exports to India climbed to NPR 258.65 billion, accounting for 82 per cent of Nepal’s total merchandise exports.
“Such a concentration of products and markets is definitely a risk for Nepal’s export industry,” trade expert Rabin Sainju told IANS. “Nepal’s exports basically depend on Indian government policy.”
The dependence comes as India’s domestic edible oil industry has stepped up pressure on New Delhi to review imports from Nepal.
Earlier this week, the Indian Vegetable Oil Producers’ Association (IVPA) urged the Indian government to act against what it described as an “unprecedented surge” in duty-free refined edible oil imports from Nepal under the South Asian Free Trade Area (SAFTA) framework.
Under SAFTA, eligible products manufactured in Nepal can be exported to India without customs duties.
The association said the sharp rise in imports represented a structural shift in India’s edible oil trade and called for policy measures to ensure trade rules, tariff objectives and domestic value addition remain aligned.
The IVPA also requested that Indian authorities verify whether Nepal’s exports comply with SAFTA’s Rules of Origin, citing Nepal’s limited domestic production of soybean and palm oil.
Sainju said Nepal needed to strengthen domestic value addition to ensure the long-term sustainability of its edible oil industry.
According to the Department of Customs, Nepal imported crude soybean oil worth NPR 132.77 billion during the fiscal year before processing and exporting the refined products, mainly to India.
Apart from edible oils, Nepal exported electricity worth NPR 29.32 billion to India and Bangladesh, although Bangladesh accounted for only a small proportion of those exports.
India also remained Nepal’s largest source of imports, with inbound shipments worth NPR 1.210 trillion during the fiscal year. Nepal’s total imports stood at NPR 2.096 trillion.
Trade with China remained heavily imbalanced. Exports to China fell 28 per cent to NPR 1.89 billion, while imports from China rose 24.7 per cent to NPR 425.25 billion, widening Nepal’s trade deficit with its northern neighbour to NPR 423.35 billion.
For every NPR 1 worth of goods Nepal exported to China, it imported approximately NPR 225 worth of Chinese products.
Trade with the United Arab Emirates also weakened during the fiscal year as imports of gold and other precious metals increased sharply.
