Trade in Nepal


Nepal has been pursuing open and market oriented trade policy. The country is member of WTO, SAFTA, BIMSTEC and MIGA. The Trade Policy 2015 aims to create a favorable environment for promotion of trade in order to make it competitive at international level. The Government of Nepal has incorporated trade agenda as a main strategy in its development plan. The country is making every effort to increase exports and minimize trade deficit. Currently the Nepal Trade Integration Strategy (NTIS) 2016 is in implementation in order to increase trade competitiveness.

Major Exports

Iron and Steel Products, Woolen Carpets, Yarns , Textiles, Readymade Garments/ Shawls, Juices, herbs, tea, cardamom, Hides and skin, Footwear, Handicrafts

Major Imports

Petroleum Products, Iron and Steels, Machinery and parts, Electronics and electrical equipments, Pharmaceuticals, Fertilizers

Priority Export potential Sectors

(As identified by NTIS, 2016)

  1. Agro based products
  • Cardamom
  • Ginger
  • Tea
  • Medicinal and Aromatic Plants
  1. Craft and manufacturing products
  • All fabrics, textile, yarn and rope
  • Leather
  • Footwear
  • Pashmina
  • Carpets
  1. Services
  • Skilled and semi skilled professionals at various categories (Remittance generating services)
  • IT and BPO and IT Engineering
  • Tourism (including leisure, business, education and medical)
  1. Other export potential products and services
  • Hydro electricity
  • All fabricated steel and metals
  • Coffee
  • Fruit and vegetable juices
  • Honey
  • Instant noodles
  • Lentils
  • Paper products
  • Readymade garments
  • Semi precious stones
  • Silver Jewellery
  • Wool products

Nepal –USA Trade Relations

Nepal and USA have a decade’s long trade relations. The US is one of the important trading partners of Nepal. It is also one of the major sources of foreign currency for Nepal primarily from the export of garments and carpets as well as from tourist incomes. After the end of the quota system under Multi-fibre Agreement (MFA) in 2004 the export of Nepali readymade garments to the United States of America has declined significantly.

At present, USA is third largest trading partner in terms of total trade and second largest export destination country of Nepal. Though, volume of bilateral trade is small, trade deficit against Nepal is widening. Nepal has duty free and quota free access for 77 items (6 digit Harmonized code) with USA. Government of Nepal is encouraging businessmen to increase exports to USA. Nepal and USA have Trade and Investment Framework Agreement (TIFA) on April 15, 2011. TIFA Council Meeting generally held between Nepal-USA in every year in Nepal and USA alternatively. The 5th such council meeting was held virtually on December 15, 2020. Since the TIFA agreement, 5 council meetings of TIFA have been concluded so far.

Trade Preference Program for Nepal: Trade Facilitation and Trade Enforcement Act 2015 (H.R.1907)

The Trade Preference Program came into effect on December 15, 2016 following the introduction of the US Trade Facilitation and Trade Enforcement Act of 2015 (H.R.1907). The Act was introduced to support Nepal’s economic recovery in the aftermath of devastating 2015 earthquakes.

Under this program, initially 66 items, and later on 77 Nepali products (https://us.nepalembassy.gov.np/eligible-77-items-for-duty-free-through-31-dec-2025/) are granted duty-free entry into the US till December 31, 2025. This means goods like carpets and rugs, shawls, scarves, luggage articles, handbags, pocket goods, such as wallets, travel bags and other containers, headbands, blankets, hats and gloves, which previously used to be subject to tariffs ranging from 5 percent to over 20 percent can now enter the US market at zero tariff with quota free. However, such goods must be grown, produced, or manufactured in Nepal, with the cost of the Nepali materials plus the cost of processing at least 35 percent of the product’s sales price.

 

Nepal-USA Trade Composition

(2014/15-2019/20)

Value in NRs. ‘000

Fiscal Year Export Import Balance
2019/20 9444366 23547649 -14103283
2018/19 10848862 13428381 -2579519
2017/18 9162539 9894077 -731538
2016/17 9208090 8464809 743281
2015/16 7467108 8590118 -1123010
2014/15 7267548 7845281 -577733

(Source: Department of Customs, Nepal)

1 USD = NRs118.99 (July 6, 2021)

Relevant links

For more information, below are some useful website links of trade-related institutions in both countries:

Nepal:

Ministry of Industry, Commerce and Supplies (https://moics.gov.np)

Trade and Export Promotion Centre (www.tepc.gov.np)

Federation of Nepalese Chambers of Commerce and Industry –FNCCI (www.fncci.org)

Confederation of Nepalese Industries: http://cnind.org/

Nepal-US Chamber of Commerce and Industry –NUSACCI (http://www.nusacci.org.np/)

Export Council of Nepal: http://www.nepalexport.org.np

United States

https://ustr.gov/countries-regions/south-central-asia/nepal