OXBRIDGE INTERNATIONAL

COLLEGE

GROWTH AND TREND OF

IMPORT AND EXPORT
IN NEPAL
Name: Aaditya Shrestha
Class: 12 “Everest”

SUBMITTED TO:
DEPARTMENT OF ECONOMICS
PREITY TANDUKAR
 LETTER OF RECOMMENDATION

This project entitled “Growth and Trend of Import and Export in Nepal” has been
prepared by Mr. Aaditya Shrestha under my constant guidance and supervision.
This is an original work of the student prepared in accordance with the contest and
the form approved by Department of Economics, Oxbridge International College. I
hereby recommended this project work for the final examination by the Thesis
Committee as a partial fulfilment of the requirement for the project of economics.
....................
Mrs. Preity Tandukar
 CHAPTER-I
INTRODUCTION

1.1 FOREIGN TRADE

Foreign trade is the transaction of goods and services between different countries. It is the
process of the exchange of capital, goods, and services across international borders or territories
because there is a need or want of goods or services. It is taken as a major part of macro-
economics where various kinds of goods and services are exported and imported among the
countries in the world. Foreign trade operates due to cost difference, specialization, and division
of labour. Since, foreign trade is affected by various factors like natural or geographical factors,
stage of economic development, accumulation or capital by a nation and its foreign investment,
technological progress, trade financial regulation, political condition and etc. Definitely the cost
of production will be different.
As a result, international trade exists among the countries for common benefit. Therefore, in
foreign trade, nations or people specialize in producing goods in which they have a greater
comparative advantage.
International trade has two aspects: bilateral international trade and multilateral international
trade. If only two countries are participating to transact commodities between each other, then it
will be called bilateral international trade. If more than two countries are involved in the export
and import of goods and services, it is known as multilateral international trade.
According to James C. Ingram, “Nations trade with each other because they benefit from it.
Other motives may be involved, of course, but the basic motivation for international trade is that
of gain. The gain from international trade, like gain from all trades, exists because specialization
increases productivity.”
International trade and the accompanying financial transactions are generally conducted for the
purpose of providing a nation with commodities it lacks in exchange for those that it produces in
abundance; such transactions, functioning with other economic policies, tend to improve a
nation’s standard of living. Much of the modern history of international relations concerns efforts
to promote freer trade between nations. This article provides a historical overview of the
structure of international trade and of the leading institutions that were developed to promote
such trade.
1.2 COMPONENTS OF FOREIGN TRADE

IMPORT
An import is a good or service bought in one country that was produced in another. Import is the
component of international trade. If the value of a country's imports exceeds the value of its
exports, the country has a negative balance of trade, also known as a trade deficit.
They can be shipped, sent by email, or even hand-carried in personal luggage on a plane. If they
are produced in a foreign country and sold to domestic residents, they are imports. If a country
imports more than it exports, it runs a trade deficit. If it imports less than it exports, that creates a
trade surplus.
Nepal has an open and transparent import regime. The import-related rules and regulations are
governed by the Ministry of Industry, Commerce, and Supplies (MoICS) and its various entities,
along with the Department of Customs under the Ministry of Finance. Import has been rapidly
increasing in Nepal. The top imports of Nepal are Refined Petroleum ($2.24B), Petroleum Gas
($504M), Gold ($433M), Rice ($322M), and Soybean Oil ($306M), importing mostly from India
($8.66B), China ($1.78B), United Arab Emirates ($374M), Indonesia ($297M), and United
States ($280M). Location Nepal borders India and China by land.
Imports in Nepal increased to 132278.80 NPR Million in February from 129777.30 NPR Million
in January of 2024. Imports in Nepal averaged 60288.40 NPR Million from 2001 until 2024,
reaching an all-time high of 299676.90 NPR Million in September of 2021 and a record low of
8000.30 NPR Million in October of 2001.

EXPORT
Export refers to a product or service produced in one country but sold to a buyer abroad. Exports
are one of the oldest forms of economic transfer and occur on a large scale between nations.
Exporting can increase sales and profits if they reach new markets, and they may even present an
opportunity to capture significant global market share. Companies that export heavily are
typically exposed to a higher degree of financial risk.
In Fiscal Year 2022/23, Nepal’s exports amounted to NPR 157.140 billion in FY 2022/23,
representing only a fraction of its imports totalling NPR 1.611 trillion. This persistent pattern
underscores the country’s concerning reliance on imports. Nepal faced a daunting trade deficit of
NPR 1.454 trillion in FY 2022/23. In April 2022, the government imposed a ban on various items
classified as “luxury goods”, to preserve its depleting forex reserves and control the trade deficit.
It remained in effect for seven months till December 2022.
Nepal has very low export rate in comparison to import rate. This leads to Nepal facing to
extreme trade deficit.
1.3 TREND OF IMPORT AND EXPORT FROM PAST FIVE YEARS IN
NEPAL.
Import and export are two components of foreign trade. The difference between export and
import is called trade balance. If export exceeds import, then it is called trade surplus. If import
is more than export, then it is called trade deficit.
There is a huge gap between export and import rate of Nepal. The major goods exported by
Nepal are carpets, ready-made clothes, pashmina, ginger, jute and jute items, noodles,
handicrafts, herbs and herbal products etc. but Nepal imports more luxurious items like
petroleum products, vehicles, machinery and equipment’s, gold and silver, medicine, chemicals,
food items, construction materials, electronic items etc. in other words, Nepal from “salt to
gold”.
Foreign trade of Nepal was confined only to India and debate in the past. Nepal straight with
overseas countries started only since 1956 AD. During the FY 1956/57, Nepal had total exports
equivalent to Rs 95.5 million. Total import was equivalent to Rs 169.9 million. Therefore,
volume of foreign trade was equivalent to Rs 265.4 million. The growth of foreign trade of Nepal
was accelerated along with the growth of economic development of Nepal.
TABLE 1.1 Growth and Trend of Total Foreign Trade (Rs. million)
Fiscal year Export Import
2017/18 81359.8 1245103.2
2018/19 97109.5 1418535.3
2019/20 97709.1 1196799.1
2020/21 141124.1 1539837.1
2021/22 200031.0 1920448.5

Table 1.1 shows the data of export and import of Nepal in the past five years i.e. from 2017/18 to
2021/22. Export along with Import has been increasing each year. But the export rate each year is
very low from the import rate, which means Nepal has been facing Trade deficit for the past few
years. In 2017/18 export is RS 81359.8m while the import is 1245103.2m. Similarly, in 2021/22
the export has increased up-to 200031.0m and import has increased to 1920448.5m. This clearly
states that, Nepal has been facing extreme trade deficit.
The main cause of increasing foreign trade deficit of Nepal is the sharp rise in imports but slow
growth and sometimes decline in the exports of the goods from the country. This has been quite a
problem in Nepalese economy.
So, this problem must be solved immediately. Some of the measures for the reduction of trade
deficit are:
1. Establishment of large-scale industries:
Nepal should establish sufficient number of large-scale industries like: chemical
fertilizers, automobiles companies, textile industries, rubber industries, agro-based
industries, fruits processing industries, paper, sugar, steel and iron industries, and so on.
The products produced by many large-scale industries reduces the imports. It helps to
minimize the trade deficit.

2. Reducing the cost of production:

The cost of production of Nepalese goods are comparatively more expensive than foreign
goods. So, Nepal should use modern technique of production to minimise the cost of
production. We should produce goods and services in large scale in order to reduce the
average cost of production. Hence, lower cost of production makes me please products
more competitive in market.

3. Increasing the productivity and types of products:

The production capacity of Nepalese industries is very low. So, the production capacity
should be increased by using modern method of production. Similarly, very few types
of products are produced in Nepal and maximum are imported. So, policies and focus
should be given towards the increasing the types of products. It substitutes for import and
reduces the trade deficit.

4. Using alternative means of transportation:

Nepal is using road transport (mainly TRUCKS) to import and export goods. It is very
expensive means of transportation. So, in order to minimize the transit cost, we should use
alternative means of transport: like railway transport to carry goods, Pipe lines for
petroleum products, at large quantity in lower transport cost. It helps to minimize the trade
deficit by lowering the transit costs.

5. Needs political stability and stable government:

One of the most notable reasons behind increasing trade deficit of Nepal is political
reason. The politics of Nepal is unstable and so is the government. Politicians and
governments in Nepal are guided by self-interest and family interest. They are mostly
busy to make new government and to dissolve the existing government. Government has
not any plans to reduce trade deficit in Nepal. So, stable government is needed in Nepal
which gives focus on public and their needs, helps to produce verities of commodities in
Nepal. It helps to minimize the trade deficit of Nepal.

The export and import growth of Nepal can be explained with given bar and charts.
FIGURE 1.1:
Export Clustered Column

Export
250000
EXPORT ( Rs.million)

200000

150000

100000

50000

0
2017/18 2018/19 2019/20 2020/21 2021/22
Axis Title

Fiscal Year

The horizontal line (x-axis) represents fiscal year and the vertical line (y-axis) represents export
in RS. Million. The chart shows the export amount of Nepal in past five years. The export has
been increasing slowly in these few years. In 2017/18, Nepal has the least export amount i.e.
81359.0 and in 2021/22, Nepal has the highest export amount i.e. 200031.0. This shows that
Nepal has been increasing its export rate gradually in these past five years, but the export rate is
still very low for development of economy of Nepal.
FIGURE 1.2:
Import Clustered Column

Import
2500000

2000000
IMPORT (Rs.million)

1500000

1000000

500000

0
2017/18 2018/19 2019/20 2020/21 2021/22
Axis Title

Fiscal Year

The above graph shows the import of Nepal in the past five years. The horizontal line represents
fiscal year whereas vertical line represents import. According to the graph, the least import was
done in 2017/18 which was 1245103.2 million and the highest import was in 2021/22 i.e.
1920448.5 million. This graph is the visual representation of import of Nepal in past five years.
The import has increased for first two years and was decreased in third year i.e. 2019/20. But
after that, in last two years the import has increased rapidly.
FIGURE 1.3:
Frequency Curve of Export

Export
250000

200031
200000
Export(Rs.million)

141124.1
150000

97109.5 97709
100000 81359.8

50000

0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

The above curve helps to analyse the export of Nepal of past five years. It further helps to
evaluate and execute the plans. This is frequency curve of export of Nepal. Here, we can see that
export has been increasing each year. The export done in 2017/18 is 81359.8 million, 97109.5
million in 2018/19 and 97709.1 million in 2019/20. Similarly, in 2020/21 Nepal has done export
of 141124.1 million and lastly in 2021/22 export is 200031.0 million. The highest export was
done in year 2021/22. And the least was in year 2017/18. Though, export has increased its still
not enough for maintenance of trade balance in Nepal.
FIGURE 1.4:
Frequency Curve of Import

Import
2500000

1920448.5
2000000
Import(Rs.million)

1539837.1
1418535.3
1500000
1245103.2 1196799.1

1000000

500000

0
2017/18 2018/19 2019/20 2020/21 2021/22
Fiscal Year

The above frequency curve shows the import of Nepal in fast five years. Every country in the
world imports goods from foreign market. Import is necessary but excess import leads to
downfall of economy of a country. In Nepal, import has increased a lot. In fiscal year 2017/18
import was done of Rs 1245103.2 million, 1418535.3 million in year 2018/19 and Rs 1196799.1
million in year 2019/20. Similarly, in year 2020/21 import was done of Rs 1539837.1 million and
lastly Rs 1920448.5 in year 2021/22. Import has increased in first two years, decreased at third
year and again increases. Highest import was done in year 2021/22 and lowest was in 2019/20.
This shows the increased trend of import in Nepal.
FIG 1.5:
PIE-CHART of Export

Export

81359.8

200031
97109.5

97709.1
141124.1

2017/18 2018/19 2019/20 2020/21 2021/22

In the above given pie chart, the data of export of Nepal to foreign countries has been shown.
The highest export was in year 2021/22 i.e. Rs 200031.0 million and the lowest export was done
in year 2017/18 i.e. Rs 81359.8 million. Export of a country changes due to various factors. The
economy along with the industrialization of a country must be strong and developed to increase
the export and maintain trade balance or surplus. Nepal is still not strong in economic growth
and industrialization which is leading to slow or minimal export.
FIG 1.6:
PIE-CHART of Import

Import

1245103.2

1920448.5

1418535.3

1539837.1

1196799.1

2017/18 2018/19 2019/20 2020/21 2021/22

The above given pie chart shows the data of import done in Nepal in past five years. The highest
export was done in 2021/22 i.e. 1920448.5 million. Similarly, lowest import was done in 2019/20
i.e. 1196799.1 million. This presents that, import in Nepal is way higher than export. Hence,
Nepalis facing trade deficit. Import helps a country to survive but not for long term. It creates
dependency and economic depression in the country. Our country has been importing lots of
valuable commodities but is unable to export corresponding amount of goods that is affecting
Nepal’s economy. Nepal has to improve a lot in uplifting its economy and export.
TABLE: 1.2:
Mean of Export and Import
Year Export (x) Import (x)
2017/18 81359.8 1245103.2
2018/19 97109.5 1418535.3
2019/20 97709.1 1196799.1
2020/21 141124.1 1539837.1
2021/22 200031.0 1920448.5
N=5 ∑x = 617333.5 ∑y = 7320723.2

Here, let export be x and import be y,

Mean of exports (x) = ∑x
N
= 617333.5
5
= 123466.7

Now,
Mean of import (y) = ∑y
N
= 7320723.3
5
= 1464144.66
Summary
Finally, the project has come to an end point, where all the data, explanation, figures related to
foreign trade have been discussed. In the first segment, introduction to foreign trade is presented
along with the theory of James C. Ingram of foreign trade.
After the introduction, components of foreign trade i.e. import and export are thoroughly
presented, along with data of import and export of Nepal. It is described that both import and
export is important for a country to be able to catch the smooth path of development. Though
there must be balance between them. But Nepal’s import is higher than export. Hence, our
country faces trade deficit.
Similarly, the trend of import and export of Nepal from past five years (2017-2022) have been
thoroughly discussed. Table 1.1 shows the rise of export in five years, where-as rise, fall and rise
of import. The table clearly shows that Nepal has been facing trade deficit due to excess import.
The main cause of trade deficit is, sharp rise in import and slow growth in export. This problem
can be solved by using some measures such as Establishment of large-scale industries, reducing
the cost of production, controlling illegal trade between Nepal and India, using the alternative
means of energy, conducting research etc.
Furthermore, the Clustered Column is the graphical representation of export and import data. It
helps to find out the flow of import and export of country. Likewise, frequency curve of import
and export is also presented along with the explanation. The curve shows the highest export and
import along with lowest export and import. It helps to analyse and implement further plans.
Similarly, pie-chart also shows the import and export data of Nepal of past five years. It
distributes the information according to the information provided. It helps on analysing the data
and parting the data.
Conclusion
To sum up all the statements explained above, foreign trade genuinely helps export to improve its
economic condition planned above, foreign trade’s import and like condition as soon as possible.
Foreign trade is the transaction of goods and services between different countries. It has two
components i.e. import and export.
There is lot to improve in Nepal’s export and import condition. Nepal’s import is way greater
than export, leading to trade deficit. The increase in trend of import is creating economic
dependency and economic depression in the country.
As Nepal imports lots of luxurious goods, Nepal should try to switch for alternative sources such
as solar energy, electricity, wind energy etc. this will help to reduce the cost of import and import
items. The potentiality in renewable sources will also increase which will help in economic
development. Nepal must focus on balancing import and export for the time being and after the
achievement of trade balance, trade surplus in the country’s economy should be aimed.
Bibliography
• Economics Book (buddha publication)
• Investopedia.com
• nepaltradeportal.gov.np
• reasearchgate.net
• Tradingeconomics.com
•