Nepal’s Foreign Trade: Growth, Composition, Direction and its Problems
Growth of Nepal’s Foreign Trade:
Foreign trade of Nepal was confined only to India and Tibet in the past before 1950s. Nepal’s trade with overseas countries started only since 1956 AD. During the same period, Nepal had total exports equivalent to Rs. 95.5 million and Rs.169.9 million import. Nepal’s balance of payment has been increasingly negative since 1970s.
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The country has been importing goods and services to a large extent as the domestic production has not been able to meet the demands of the people. According to the trade and promotion center, the country imported goods worth Rs. 893 billion in the first 11 months of the fiscal year 2016/2017. Meanwhile, the export of goods was equivalent to Rs. 67.36 billion only. The amounts of goods imported from India was 65.5 percent while that from China was 13.1 percent and remaining 21.4 percent total goods from third countries. In the table ( * ) indicates first 11 months data.
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Table:
(Rs. in ten million)
FY
|
TotalExport
|
TotalImport
|
Total Volume
|
BOT
|
2012/13
|
7691.7
|
55674.0
|
63365.8
|
-47982.3
|
2013/14
|
9199.1
|
71436.6
|
80635.7
|
-62237.5
|
2014/15
|
8531.9
|
77468.4
|
86000.3
|
-68936.5
|
2015/16
|
7011.7
|
77359.9
|
84371.6
|
-70348.2
|
2016/17*
|
4821.8
|
62856.1
|
67677.8
|
-58034.3
|
Composition of Foreign Trade:
The composition of foreign trade refers to various items of export and import. It shows what goods and services a country exports to foreign countries and what goods and services does it import from abroad. It shows the various goods and services traded in a particular fiscal year.
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Nepal imports various finished goods, semi-finished goods, raw materials for industries, machinery equipment, chemical fertilizer, petroleum products etc. being a developing country. Principal items exported to India and overseas countries consisted of jute, pulse items, live animals, food, carpet, readymade garments, handicrafts, herbs, transport equipment etc. As per the Standard International Trade Classification (SITC) group, composition of export and import trade is presented in the table below:
Table: Rs. in ten million (FY 2015/16)
S.N.
|
SITC Group
|
Imports
|
Exports
|
1.
|
Food and live animals
|
10975.6
|
1642.1
|
2.
|
Tobacco and beverages
|
641.3
|
47.8
|
3.
|
Crude materials and inedible
|
3339.2
|
221.8
|
4.
|
Minerals, fuels and lubricants
|
8408.8
|
0.1
|
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5.
|
Animals and vegetables, oil and fats
|
2115.3
|
10.7
|
6.
|
Chemicals and drugs
|
10396.2
|
461.8
|
7.
|
Classified by materials
|
16313.2
|
3266.6
|
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8.
|
Machinery and transport equipment
|
18976.4
|
40.0
|
9.
|
Miscellaneous manufactured articles
|
4586.4
|
1320.5
|
10
|
Not classified
|
1607.4
|
0.3
|
Total
|
77359.9
|
7011.7
|
Direction of Foreign Trade:
Direction of foreign trade means the countries to which a country exports its goods and the countries from which it imports. It refers to Nepal’s trade partners. Nepal’s biggest trade partner is India. The share of trade with any other individual country is not comparable with India. On an average, 67 percent of Nepal’s foreign trade is concentrated only with India and around 33 percent with other countries in the world. Nepalese products are exported to India, China, USA, UK, France, Belgium, Thailand etc. direction of foreign trade has been presented as below:
Table: Export (Rs. In ten million)
Year
|
2012/13
|
2013/14
|
2014/15
|
2015/16
|
2016/17*
|
India
|
5100.0
|
5961.4
|
5586.5
|
3949.4
|
2780.4
|
China
|
208.6
|
284.1
|
223.0
|
168.2
|
115.1
|
Other
|
2383.2
|
2953.7
|
2722.5
|
2894.2
|
1926.3
|
Total
|
7691.8
|
9199.1
|
8531.9
|
7011.7
|
4821.8
|
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Table: Import Rs. In ten million
2012/13
|
2013/14
|
2014/15
|
2015/16
|
2016/17*
| |
India
|
36703.1
|
47794.7
|
49165.6
|
47721.3
|
41060.5
|
China
|
6245.1
|
7331.9
|
10016.6
|
11569.4
|
8258.1
|
Other
|
12725.8
|
16310.0
|
18286.2
|
18069.2
|
13537.4
|
Total
|
55674.0
|
71436.6
|
77468.4
|
77359.9
|
62856.1
|
Total Volume
|
63365.8
|
80635.7
|
86000.3
|
84371.6
|
67677.8
|
BOT
|
-47982.3
|
-62237.5
|
-68936.5
|
-70348.2
|
-58034.3
|
Table: Volume in Percentage
Year
|
2012/13
|
2013/14
|
2014/15
|
2015/2016
|
2016/17*
|
India
|
66.0
|
66.7
|
63.7
|
61.2
|
64.8
|
China
|
10.2
|
9.4
|
11.9
|
13.9
|
12.4
|
Other
|
23.8
|
23.9
|
24.4
|
24.8
|
22.8
|
Total
|
100
|
100
|
100
|
100
|
100
|
Problems of Foreign Trade:
•Difficult geographical location
•Limited goods and limited countries
•Low quality production
•Open border with India
•Defective government policy
•Tough competition with foreign goods
•Transaction of primary products
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