Export surges 89.64% in Q1, but trade deficit widens 12.18%

KATHMANDU: Nepal’s merchandise exports surged by 89.64% in the first quarter of fiscal year 2025/26 (mid-July to mid-October).

According to foreign trade data released by the Department of Customs (DoC) on Sunday, Nepal exported goods worth Rs 72.78 billion in the first three months of 2025/26, up from Rs 38.37 billion during the same period of the previous fiscal year.

However, a 16% rise in imports has further widened the country’s chronic trade deficit. Data show Nepal imported goods worth Rs 468.98 billion—nearly 6.5 times its total exports—during the review period of the current fiscal year, up from Rs 290.75 billion in the first three months of 2024/25.

The share of exports in total trade improved from 8.94% in the same period of the previous fiscal year to 13.46% in the first three months of the current fiscal year.

Despite the strong export growth, high import volumes masked Nepal’s overall performance as the trade deficit widened by 12.18% during the review period. Nepal recorded a trade deficit of Rs 395.30 billion in the first three months of 2025/26, compared to Rs 352.37 billion in the same period last year.

The total size of foreign trade expanded by 26% to Rs 540.86 billion in the first quarter of 2025/26, up from Rs 429.13 billion in the corresponding quarter of 2024/25.

What is worrying for Nepal is that nearly 50% of total export earnings came from processed edible oil—soybean, sunflower and palm oil—exported to India. Nepal exported Rs 30.69 billion worth of sunflower oil and fractions alone in the review period. For the past many months, Nepali refineries have been importing crude edible oil from different countries and exporting it to India after processing, taking advantage of zero or very low import duties levied by its southern neighbor.

Economists fear this export revenue stream would collapse if India tightened imports to protect its refineries.

Top Five Imports

Crude soybean oil – Rs 30.24 billion

Diesel – Rs 20.69 billion

Chemical fertilizers – Rs 17.11 billion

Petrol – Rs 16.76 billion

LPG – Rs 13.98 billion

Top Five Exports

Soybean oil and fractions – Rs 30.69 billion

Sunflower oil and fractions – Rs 2.13 billion

Palm oil – Rs 1.73 billion

Large cardamom – Rs 1.67 billion

Carpet – Rs 1.64 billion