Nepal is now facing an export conundrum. In the fiscal year 2020/21, the country exported goods worth Rs 141 billion that is highest amount the country earned from export trade. Even in the first six months of the current fiscal, export trade doubled compared to the same period last year. It grew by 95.48 per cent to Rs. 118 billion. However, the dramatic rise in the export can hardly conceal another bitter fact – the soaring import that has 89.37 per cent share in foreign trade against the meagre 10.63 per cent share of export. This has increased trade deficit at an alarming rate. It has risen to Rs. 1,015.80 billion in the first seven months of the current fiscal year, which is higher by 38.45 per cent compared to the corresponding period last year. This year the country spent huge amount of money to procure vaccines and petroleum products. Anti-COVID vaccines worth Rs. 26.85 billion were imported during the first seven months of the current fiscal year. Last year the government procured vaccines worth Rs 1.34 billion.

Similarly, the country spent Rs. 72.96 billion for diesel, Rs. 33.56 billion for petrol, Rs. 34.69 billion for liquefied petroleum gas worth Rs. 34.69 billon, Rs. 6.40 billion for aviation fuel and Rs. 744 million for kerosene. It is natural for the country to procure fuel but it also has to spend a huge chunk of foreign reserves for agro products. It imported crude soybean oil worth Rs. 36.54 billion, crude palm oil worth Rs. 29.22 billion and crude sunflower worth Rs. 12.37 billion during the review period. Likewise, maize worth Rs. 12.14 billion, paddy and rice worth Rs. 32.34 billion and wheat worth Rs. 4.08 billion were imported, according to the news report of this daily. However, soybean and palm oil have greatly contributed to the export volume. The country exported soybean oil worth Rs. 36.85 billion and palm oil worth Rs. 34 billion. Cardamom worth Rs. 2.64 billion, yarns worth Rs. 5.7 billion, tea and coffee worth Rs. 2.37 billion, carpet worth Rs. 5.07 billion and felts worth Rs. 3 billion were also imported.

As the spending on imported goods surpassed that of exported ones, the trade-deficit naturally grows, making a hole in hard-earned foreign reserves and tipping the balance of payment to the deficits. This has prompted the central bank to put curbs on the import of luxurious goods. In early 1990s, the country adopted liberal economic policy that enabled the nation to break multiple barriers to foreign trade. While focusing on the foreign trade, the country, however, failed to give equal emphasis on producing goods having comparative advantage in foreign markets. The gap between the free trade and production gave rise to the current situation. Joining the free trade regime does not mean the increased dependency on foreign products but to bolster the economic interdependence.

Nepal’s economic mainstay is agro-based but its share of the import of agro items stands at 22 per cent. This shows that the agriculture sector has failed to get necessary support for its production boost. In the past, the country earned good money by exporting carpet, readymade garments and pashmina but now their export has substantially declined owing to the lack of trade logistics and infrastructure. This calls for reviewing the current export strategy and establishing the industries that substitute imports and increase the production of exportable items thereby reducing the ever increasing trade-deficit and making export as reliable means of accumulation of national wealth.