Nepal has the largest volume of trade with India. Nepal also has the largest trade deficit with India, and this figure is increasing from year to year. Of late, it is widely felt that Nepal must concentrate heavily on import substitution and in setting up and furtherance of export-oriented industries. To achieve this, Nepal must attract direct foreign investment with more and more value additions in Nepal so that it may industrialize faster and also increase trade with India so as to reduce the trade deficits with the trading partners.
Ready-made garments are Nepal’s topmost export items to overseas countries, followed by woollen carpets and pashmina products. Other traditional export items to overseas countries are hides and skin, lentils, metal and wooden handicrafts, agro- and forest-based primary and secondary goods, leather, raw jute, large cardamom, ginger, tea and medicinal herbs. Coffee, honey, terry towels, micro transformers, blankets and buttons are emerging as new export items.
Visualizing the scope of technology enhancement and production potentials, the upcoming export items are mushroom, saffron and flori culture products. Vegetable seeds, orthodox and CTC tea, niger seeds, essential oils from medicinal and aromatic plants, leather goods, woolen goods, silver jewelry and silverware, gold jewelry, etc also offer good export prospects beside the existing exportable items.
Over the years, Nepalese imports have increased substantially and undergone major structural changes. The major import items include petroleum products, machinery and spare parts, transport equipment, pharmaceuticals, textiles, chemicals, electrical goods, vehicles and spare parts, medicines and medicinal equipment, raw wool, betel nuts, aircraft and spares parts, raw silk, threads, fertilizers, telecommunication equipment, etc.