Nepal’s exports reached a record high in FY 2025-26, driven mainly by refined edible oil exports to India. Experts warn that Nepal’s growing dependence on edible oils and the Indian market poses significant risks to long-term export sustainability and trade stability.
Nepal achieved its highest-ever merchandise exports in the fiscal year 2025-26, which concluded in mid-July, with exports increasing by 13.8 percent to a record NPR 315.29 billion. While the figures reflect a strong performance in international trade, economists and trade experts have raised concerns that the country’s export growth is becoming increasingly dependent on a limited range of products and a single export destination—India.
According to the annual foreign trade statistics released by Nepal’s Department of Customs, refined soybean oil continued to dominate the country’s export basket. The product alone generated NPR 128.74 billion in export earnings, accounting for 40.8 percent of Nepal’s total merchandise exports during the fiscal year.
When other edible oil products are included, exports under the category of animal and vegetable fats and oils reached NPR 148.98 billion. This represented 47.3 percent of Nepal’s total exports, meaning that nearly one out of every two export rupees earned by the country came from edible oil products. Almost the entire volume of these refined edible oils was exported to the Indian market.
Despite the impressive export figures, Nepal’s edible oil industry relies heavily on imported raw materials. The country imports crude soybean oil primarily from Argentina and other South American nations, refines it domestically, and exports the finished products to India with added value. Since Nepal lacks large-scale commercial soybean cultivation, the country’s largest export industry remains dependent on imported inputs rather than domestic agricultural production.
India continued to be Nepal’s largest export destination during FY 2025-26. Exports to India climbed to NPR 258.65 billion, accounting for approximately 82 percent of Nepal’s total merchandise exports. This overwhelming dependence on a single market has prompted concerns over the country’s export resilience.
Trade expert Rabin Sainju warned that such a high concentration of both products and markets exposes Nepal’s export sector to considerable risks. He noted that Nepal’s export performance is closely tied to Indian government policies, making the country vulnerable to regulatory or tariff changes introduced by its southern neighbour.
These concerns have intensified following recent developments in India. The Indian Vegetable Oil Producers’ Association (IVPA) has urged the Indian government to address what it described as an “unprecedented surge” in duty-free refined edible oil imports from Nepal under the South Asian Free Trade Area (SAFTA) agreement.
Under the SAFTA framework, qualifying Nepali products enjoy duty-free access to the Indian market. However, the IVPA has argued that the rapid increase in edible oil imports warrants policy review to ensure that trade rules, tariff objectives, and domestic value addition remain balanced. The association has also called for verification of Nepal’s compliance with SAFTA’s Rules of Origin, citing the country’s limited domestic production of soybean and palm oil.
Experts believe Nepal should increase domestic value addition and strengthen local agricultural production to make its edible oil industry more sustainable in the long run. Customs data revealed that Nepal imported crude soybean oil worth NPR 132.77 billion during the fiscal year before processing and exporting the refined products, mainly to India.
Apart from edible oils, Nepal exported electricity worth NPR 29.32 billion to India and Bangladesh, although Bangladesh accounted for only a small share of these energy exports.
India also remained Nepal’s largest import partner, with imports valued at NPR 1.210 trillion. Nepal’s total imports during FY 2025-26 reached NPR 2.096 trillion, highlighting the country’s significant trade imbalance.
Trade with China also reflected widening disparities. Nepal’s exports to China declined by 28 percent to NPR 1.89 billion, while imports from China increased by 24.7 percent to NPR 425.25 billion. Consequently, Nepal’s trade deficit with China expanded to NPR 423.35 billion, with the country importing approximately NPR 225 worth of Chinese goods for every NPR 1 exported.
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Meanwhile, trade with the United Arab Emirates weakened as imports of gold and other precious metals rose sharply. As Nepal celebrates record export earnings, policymakers are increasingly focused on diversifying both export products and international markets to reduce vulnerability and ensure long-term economic stability.
