Problems of Foreign Trade In Nepal

Nepal is facing a problem of ever increasing trade deficit. Import is rapidly increasing but the increase in
export is very low. Nepal is unable to take the advantage of Globalization. Due to some internal and
external reasons, it is very difficult to maintain trade balance here. The followings are the main
problems of foreign trade in Nepal:

1. Land locked country:

Nepal is a land locked country. It is surrounded by India on three sides and by China on one side. Most of
the transport facilities have to depend on India’s will. So, Nepal has to depend entirely on India while
making export to and import form other countries. Hence, land locked has been the obstacles in the
foreign trade in Nepal.

2. Illegal trade between India and Nepal:

Nepal has a long open border with India. Due to this long and open border various types of illegal trade
are taking place. It increases corruption, black marketing, reduced tax etc. which create problem in
foreign trade.

3. Top competition with foreign goods:

Nepal has implemented free trade policy. So, foreign goods enter into Nepal without any barrier. The
flow of foreign goods has highly dominated the products of Nepal in terms of price, quality and quantity.
As a result, Nepalese products are losing their position both in international as well as domestic market.

4. Underdeveloped industrial sector:

The industrial sector of Nepal is still in under-developed condition. Established industries are not
functioning smoothly due to lack of capital, lack of fuel, electricity, etc. The exported oriented industries
are not fully reliable and durable but they are mostly seasonable in nature which creates difficulties in
Nepalese foreign trade.

5. Internal problems:

Nepal is facing internal problems like political instability, strike, crime etc. which badly affects the
production of exportable goods. Irregularity of electricity and shortage of fuel are also the internal
problems of Nepal.

6. Lack of advertisement:

Advertisement is necessary to promote the foreign trade. Nepal has not advertised its products.
Therefore, foreigners are unknown about Nepalese products which hamper the Nepalese foreign trade.