Nepal’s export growth driven by imported oil processing and exposed to Indian policy risks

Nepal’s exports posted strong growth in the first half of the current fiscal year, but the structure of trade remains highly concentrated and dependent on a narrow set of products. Total export earnings reached over NPR 222.9 billion, up 18.5% year-on-year.

The main driver of this growth has been processed vegetable oils, particularly soybean oil. A significant share of this export segment is not based on domestic raw materials, but on imported crude oils that are processed in Nepal and then re-exported to external markets.

This model leaves Nepal’s export performance heavily exposed to policy and tariff decisions in India, its key export destination. Any changes in import duties, rules of origin, or regulatory restrictions from New Delhi could quickly disrupt or significantly reduce this trade flow.

Outside the edible oil segment, traditional exports such as tea, cardamom, carpets, pashmina, and garments continue to grow but remain relatively small in scale. These sectors also face challenges related to quality standards, logistics inefficiencies, and limited global branding.