"These 10 Products Generate Billions of Dollars in Revenue for Nepal through Exports"

Rekha Shrestha

Kathmandu- The strength or weakness of any country's economy is often determined by examining its trade capacity. Traditionally, Nepal's economy has been primarily agricultural. For decades, the country's core trade structure has also been based on agriculture. Agriculture accounts for nearly one-third of Nepal's Gross Domestic Product (GDP) and two-thirds of total employment. Despite Nepal's potential for diverse production due to its biological and geographical diversity, this potential has not been fully utilized, leading to an economy that is more consumption- and import-oriented than production-based. Experts have noted that this reliance on imports is one of the reasons behind the current economic challenges, such as the growing trade deficit and the depletion of foreign exchange reserves.

The key to reducing the increasing trade deficit is import substitution and export growth. It's not that Nepal doesn't export goods; however, the volume of imports far exceeds the volume of exports, which has negatively impacted the economy. The World Bank had previously indicated that Nepal could potentially increase its export trade by at least eight times. While there are immense possibilities in Nepal's export sector, we have not been able to capitalize on them.

In the fiscal year 2080–81 (2023-2024), total goods exports decreased by 3.0%. According to the current economic and financial status of the country published by the Central Bank, exports decreased by 3.0% within a year, amounting to NPR 152.38 billion. In the previous year, exports had decreased by 21.4%. Based on the destination, exports to India and other countries decreased by 3.3% and 4.3%, respectively, while exports to China increased by 46.6%. Product-wise, the export of zinc sheets, particle boards, juice, and polyester yarn has increased, whereas the export of palm oil, soybean oil, woolen carpets, brassware, and jute products has declined. Today, we will discuss the top 10 goods exported from Nepal.

1. Surge in Zinc Sheet Exports

Zinc sheets rank first among the goods exported from Nepal. Recently, zinc sheets have overtaken traditional exports like palm oil, tea and coffee, carpets, and cardamom. Nepal-produced zinc sheets have rapidly expanded their presence in the Indian market. According to data from the Central Bank, in the fiscal year 2080–81, zinc sheet exports reached NPR 11.85 billion. In comparison, zinc sheet exports amounted to NPR 7.70 billion in the fiscal year 2079–80 and NPR 2.84 billion in the fiscal year 2078–79.

If we rely on the data published by the Central Bank, zinc sheet exports have been growing rapidly in recent times. Nepal's zinc sheets are particularly popular in India's northeastern states. About 99% of the zinc sheets exported from Nepal go to India, with a small percentage also exported to countries like Sri Lanka and Romania. Nepal lacks the raw materials needed for zinc sheet production. Only Nepalese electricity is used as raw material in the steel industry, with other raw materials needing to be imported.

2. Yarn

Another important export item bringing foreign currency into Nepal is yarn (including polyester, viscose, and blended yarns). Yarn has set records for Nepal's exports at various times. Recently, there has been a high demand for Nepalese yarn in the global market. According to Central Bank data, yarn exports amounted to NPR 11.21 billion in the fiscal year 2080–81. In the fiscal year 2079–80, yarn exports stood at NPR 10.55 billion, while they were NPR 9.51 billion in the fiscal year 2078–79. Thus, according to the Central Bank's data, yarn exports have been increasing annually. A large portion of the yarn exported from Nepal goes to India, followed by Turkey, South Korea, Japan, Vietnam, Germany, the United Kingdom, France, Italy, and Canada, according to the Nepal Yarn Manufacturers Association.

Yarn is the raw material necessary for weaving textiles. Globally, the main sources of yarn are silk and cotton cultivation and sheep farming. Other sources exist but are minimal. Yarn is produced in Nepal in both large and small factories, which are then used in various products such as clothes, shirting, suiting hosiery, and sweaters. Of the yarn produced, 75% is exported, while 25% is consumed domestically. In the past, some raw materials were produced within Nepal. Recently, however, Nepal has become dependent on imports for the raw materials needed to produce yarn. Nepal is a country with a unique climate. The raw materials needed for yarn can be sourced through sericulture and cotton farming in the Terai and hilly regions, and through sheep farming in the hilly and Himalayan regions. However, the Nepal Yarn Manufacturers Association has indicated that due to the lack of government priority, Nepal has not been able to export yarn to its full potential.

3. Carpets

At one time, carpets were the top export item from Nepal, but last year, carpets fell to the third position. Nepalese carpets have a unique identity in the global market. According to the Central Bank's data, carpet exports amounted to NPR 10.57 billion in the fiscal year 2080–81. In the fiscal year 2079–80, carpet exports were NPR 11.50 billion, while in the fiscal year 2078–79, they amounted to NPR 9.56 billion. Thus, if we base our assessment on the data from recent years, carpet exports are decreasing.

The international market is the primary market for Nepalese carpets, with most carpets produced being exported abroad. Nepalese carpets have been exported to over 50 countries worldwide, including the United States, which has shown the highest preference for them. Carpets produced in Nepal using domestic raw materials are a major export product. Although Nepalese carpets are an important source of foreign currency, this sector has not received much government support. The world is currently experiencing an economic recession. The Nepal Carpet Manufacturers and Exporters Association argues that the impact of the COVID-19 pandemic and the ongoing Russia-Ukraine war have not yet subsided, leaving the global economy, including Nepal's, struggling to recover. The recession in the economy has affected the carpet industry, just as it has other sectors. Although demand for carpets in international markets is strong, high production costs have made them expensive, affecting exports.

4. Juice

Juice is one of the major goods exported from Nepal. Annually, juice exports bring in significant foreign currency to Nepal. In the past, many did not anticipate the growth in juice exports, but the current situation has shown that with quality production and export promotion, Nepal's agricultural development can contribute to economic growth. There is immense potential in this sector, but we have not yet fully realized our export potential. According to the Central Bank's data, juice exports amounted to NPR 8.65 billion in the fiscal year 2080–81.

In the fiscal year 2079–80, juice exports were NPR 6.62 billion, while they amounted to NPR 6.07 billion in the fiscal year 2078–79. As international demand for Nepalese juice increases, there is potential for further export growth. Juice produced in Nepal is exported to countries such as Bangladesh, China, Italy, Korea, and the Maldives, in addition to India. The government banned the import of energy drinks and flavored synthetic drinks, which has led to an increase in the export of domestic juices. There has been a ban on the import of energy drinks and flavored synthetic drinks for the past five years. The increase in juice exports supports the policy of import substitution by controlling imports of goods that can be produced domestically or by imposing higher customs duties.

5. Cardamom

Cardamom is one of the most exported goods from Nepal. It makes a significant contribution to reducing the country's trade deficit and is produced in more than 43 districts across the country. Cardamom production provides a livelihood for over 70,000 families, and Nepal exports billions of rupees worth of cardamom annually. Only about 4% of the cardamom produced is consumed in the domestic market, while the remaining is exported.

However, cardamom exports have been decreasing recently. According to the Central Bank's data, cardamom exports amounted to NPR 7.93 billion in the fiscal year 2080–81. In the fiscal year 2079–80, cardamom exports were NPR 8.25 billion, while they amounted to NPR 4.77 billion in the fiscal year 2078–79. India is the largest importer of Nepalese cardamom, with Pakistan also being a destination. Despite its potential, the cardamom sector in Nepal faces numerous challenges, according to the Nepal Cardamom Business Association.

Nepal is the largest producer of cardamom globally, accounting for 55–60% of the world's production. The remaining production comes from India and Bhutan. However, most of the cardamom produced in Nepal depends on the Indian market, with only a small portion exported to Pakistan. Approximately 60% of the cardamom from Nepal is consumed in India, while the remaining 40% is re-exported to other countries under Indian branding. Cardamom produced in Nepal is of high quality, which is why India imports it, processes it, and then re-exports it to markets in Saudi Arabia, the UAE, Bangladesh, and Pakistan. Nepal could benefit more by exporting cardamom to other countries, apart from India, by focusing on processing, packaging, and facilitating business operations. For this, it is necessary for the government to modernize and systematize cardamom farming and ensure the official entry of Nepalese cardamom into international markets.

6. Particle Board

Among the goods exported from Nepal is particle board. Particle board has been exported enthusiastically to India from Nepal. According to the Central Bank's data, particle board exports amounted to NPR

After India's Ministry of Forests introduced a policy of banning deforestation and focusing on forest conservation for the next five years, Nepal began meeting the demand by exporting particle boards.

7. Jute Products

Once, the eastern Terai regions of Morang, Sunsari, and Jhapa had flourishing jute cultivation. Over a dozen industries were operational, utilizing the produced jute as raw material. However, with the decline in jute farming, many industries have shut down, and the remaining ones are forced to rely on imported raw materials. The Nepal Jute Association reports that only 30% of jute raw materials are produced domestically, with the remaining 70% needing to be imported from India and Bangladesh. This reliance on imports has directly impacted exports.

According to the Central Bank's data, jute product exports amounted to NPR 6.75 billion in the fiscal year 2080–81. In the fiscal year 2079–80, jute product exports were NPR 7.24 billion, while in the fiscal year 2078–79, they amounted to NPR 7.49 billion. Based on the Central Bank's data, jute product exports have been gradually decreasing in recent years.

With the closure of the Jute Development Center, which provided economic and technical support for farming, many farmers have abandoned jute cultivation, leading to a decline in exports. The jute sector holds significant importance in the country's economic development, and the export of raw jute could greatly contribute to reducing the growing trade deficit. If the government continues to prioritize this sector, the jute industry could make a more substantial contribution to the nation.

8. Palm Oil

Until a few years ago, palm oil, a product not even produced in Nepal, ranked as the top export item from the country. However, recently, the export of refined palm oil has been declining.

According to the Central Bank's data, palm oil exports amounted to NPR 6.33 billion in the fiscal year 2080–81. In the fiscal year 2079–80, palm oil exports were NPR 20.50 billion, while in the fiscal year 2078–79, they amounted to NPR 41.06 billion. Based on the Central Bank's data, palm oil exports have been gradually decreasing in recent years.

Raw palm oil is imported from abroad, processed in Nepal, and then exported to India. This oil is a type of vegetable oil, originating from African countries, and is now produced in large quantities in Indonesia and Malaysia. Nepalese oil businesses import palm oil from Indonesia, Malaysia, and Thailand and export it to India.

9. Ready-made Garments

Not only are ready-made garments imported into Nepal, but they are also exported. In recent years, the export of ready-made garments has been increasing. According to the Central Bank's data, ready-made garment exports amounted to NPR 6.29 billion in the fiscal year 2080–81. In the fiscal year 2079–80, ready-made garment exports were NPR 5.83 billion, while in the fiscal year 2078–79, they amounted to NPR 4.88 billion. Based on the Central Bank's data, ready-made garment exports have been gradually increasing in recent years.

10. Tea

Due to high demand for Nepalese tea in international markets, farmers are increasingly attracted to tea cultivation. While the country imports billions of rupees worth of agricultural products, Nepal has been exporting tea. About 60% of the CTC tea and 90% of the Orthodox tea produced in Nepal are sold in foreign markets. Commercial tea cultivation takes place in the eastern districts of Nepal, including Sankhuwasabha, Taplejung, Tehrathum, Panchthar, Dhankuta, Ilam, and Jhapa.

According to the Central Bank's data, tea exports amounted to NPR 3.61 billion in the fiscal year 2080–81. In the fiscal year 2079–80, tea exports were NPR 3.93 billion, while in the fiscal year 2078–79, they amounted to NPR 3.42 billion. Based on the Central Bank's data, tea exports have been gradually increasing in recent years.

While CTC tea's primary market is India, Orthodox tea is exported to countries like the United States, France, Germany, and others. Although CTC tea reaches international markets through India, Orthodox tea is directly exported by Nepalese businesses. Orthodox tea is cultivated in hilly regions.

Recently, the decline in tea exports has been attributed to producers not getting prices commensurate with their costs, leading them to stockpile special varieties of tea instead of selling them. Additionally, India has been purchasing Nepalese tea at low prices and selling it at higher prices in the global market. Despite good production, Nepal has not been able to achieve the expected market growth.