Nepal's reliance on India for exports has increased in recent years, with over four-fifths of the total volume going to the southern neighbor in the first four months of the current 2021-22 fiscal year starting in mid-July, government data show.
Nepal exported goods worth 66.94 billion Nepali rupees (557 million U.S. dollars) to India during the first four months of the current fiscal year or 81.51 percent of the total exports.
"One of the main reasons behind the increasing dependency on India is COVID-19-related restrictions against export and import of goods from other third countries, as Nepal shares an open border with India," Rabi Sainju, former joint secretary at Nepal's Ministry of Industry, Commerce and Supplies, told Xinhua.
India became the destination for 64.6 percent of Nepal's total exports in 2018-19, which grew to 71.75 percent in 2019-20 and 75.75 percent in 2020-21, according to the data released by the Trade and Export Promotion Centre (TEPC) under the Commerce Ministry.
Nepal has not been able to produce goods in large quantities for export to third countries other than India, said Sainju.
"Most of the export products in Nepal are produced by small- and medium-sized enterprises and we have to collect goods from them to be shipped abroad in large quantities, and it is also difficult to ensure the same quality of the goods collected from different enterprises," he said, adding that Nepal has also not been able to take advantage of the duty-free market access offered by China, the European Union and the United States.
The imports from India had accounted for around two-thirds of Nepal's total imports for the last three years, though they went down to 59.35 percent during the first four months of the current fiscal year, according to the TEPC data.
"There is an inherent risk of relying on a single market for trade," Keshav Acharya, a senior economist, told Xinhua. "Nepal needs to diversify its trade so that the country will have enough leverage at a time of crisis."