Nepal’s trade deficit with South Asian countries widened by a whopping 51.2 percent in the first nine months of the current fiscal year driven by massive hike in imports from countries such as India, Pakistan and Bangladesh.

Nepal’s trade volume with member countries of the South Asian Association for Regional Cooperation (Saarc) stood at Rs505.23 billion in the nine-month period from mid-July to mid-April, according to Trade and Export Promotion Center (TEPC).

This trade volume is 46 percent more than in the same period a year ago.

But along with the trade volume, Nepal’s trade gap with these South Asian countries also surged by Rs444.08 billion in the first nine months of the current fiscal year.

Nepal’s trade deficit with these countries stood at Rs293.55 billion in the nine-month period of the last fiscal year.

According to the TEPC, total import from the region surged by 48.1 percent to Rs477.05 billion during the review period, as imports from India alone jumped 48.2 percent to Rs473.12 billion. India-based import accounts for 99.17 percent of Nepal’s total imports from South Asia.

Similarly, imports from Pakistan rose 63 percent to Rs310.94 million while imports from Bangladesh soared to Rs3.17 billion in the nine-month period from Rs1.97 billion in the same period a year ago. 

On the other hand, Nepal’s export to Saarc countries increased by a mere 15.23 percent to Rs32.97 billion in the first nine months of the current fiscal year. India alone contributed 97.39 percent to this earning. 

Trade statistics show that Nepal is highly dependent on India for both imports and exports, while trade with other South Asia countries is moving ahead at snail’s pace despite signing of Safta (South Asia Free Trade Agreement) over a decade ago.

Former Commerce Secretary Purushottam Ojha said weak export base has deepened Nepal’s trade dependency with India. “Nepal has failed to diversify its trade. As a result, it has not been able to gain a competitive edge,” he said.  

Over the review period, Nepal’s export earnings from Bhutan, Afghanistan and Sri Lanka dropped significantly. Similarly, export earnings from Bangladesh rose 19 percent to Rs649.07 million while export earnings from India surged to Rs32.11 billion from Rs27.72 billion in the same period last year. Trade volume with Maldives was very nominal.

Ojha said the nominal rise in exports to Bangladesh and declining exports to Bhutan and Sri Lanka were due to sensitive lists maintained by these countries. “Most of Nepal’s exportable goods, such as agricultural products, are in the sensitive lists of these countries, which have created barriers for entry of those goods to those countries,” Ojha said. 

Of late, Nepal’s trade deficit with Bangladesh is also widening due to falling exports and rising imports. Lentils, fruit juice, animal skin and food preparation items are major products that are exported to Bangladesh.

Jute, potato, fruit juice, lead acid accumulator, rice, bottled water and non-alcoholic beverages are the major items that are imported from Bangladesh. 

Of its seven trading partners in the region, Nepal enjoys nominal trade surplus with Maldives. 

Trade with south asian countries (in million rupees)

    Import 2015-16    Import 2016-17    Export 2015-16    Export 2016-17

India    319,317    473,124    27,722    32,112

Bangladesh    1,979    3,171    545.810    649.070

Bhutan    400.900    311.780    137.430    67.110

Pakistan    190.999    310.945    31.170    143.408

Sri Lanka    185.029    130.967    7.370    2.537

Afghanistan    88.161    1.156    173.984    0.000

Maldives    0.016    0.009    0.035    0.057

Total     322,161    477,050    28,617    32,974

Aggrerate trade figures

    2015-16    2016-17

Import     Rs322.16 b    Rs477.05 b

Export    Rs28.61 b    Rs32.97 b

Trade balance    Rs293.55 b    Rs-444.08 b