Nepal's import bill crossed Rs 2.09 trillion in FY 2025/26 — nearly six and a half times its export earnings. Fuel, edible oil, machinery, and vehicles dominate the list, and together they explain most of why the trade deficit keeps widening year after year. Here's exactly what Nepal buys from the rest of the world, and why the bill keeps climbing.
Nepal's Import Basket Overview
| Category | Value (Rs billion) |
|---|---|
| Petroleum products | 172.43 |
| Animal/vegetable fats & oils | 145.33 |
| Machinery & mechanical appliances | 123.60 |
| Iron & steel | 118.31 |
| Electrical machinery | 112.21 |
| Vehicles & parts | 96.79 |
| Cereals | 51.26 |
| Fertiliser | 49.29 |
Figures above cover the first ten months of FY 2025/26 per Department of Customs data. Add gold, mobile phones, pharmaceuticals, and processed foods, and it becomes clear Nepal's import bill isn't dominated by one bad habit — it's a wide, structural dependency spanning energy, industry, agriculture, and consumer goods.
1. Petroleum Products (Diesel, Petrol, LPG, ATF) — The Biggest Line Item
Petroleum remains Nepal's single largest import category, worth Rs 172.43 billion in the ten-month period, sourced almost entirely from India via the state-owned Nepal Oil Corporation's arrangement with Indian Oil Corporation. Diesel, used heavily in freight transport and generators, is typically the costliest single item within this category, followed by petrol and LPG. Because Nepal has no refining capacity of its own and demand for transport fuel and cooking gas is highly inelastic, this bill moves almost entirely with global crude prices and domestic consumption growth — not with any policy lever Nepal directly controls.
2. Crude Soybean & Sunflower Oil (from Argentina, Brazil)
This is the flip side of Nepal's soybean oil export success story. Nepal imported crude soybean oil worth roughly Rs 132.77 billion in FY 2025/26, overwhelmingly sourced from Argentina, alongside crude sunflower oil from Argentina and Ukraine and crude palm oil from Indonesia and Thailand. Domestic refiners process these raw oils and re-export the finished product, primarily to India. It is, in effect, an import category that exists specifically to feed an export category — which is precisely why economists caution against reading Nepal's edible-oil export growth as evidence of a diversifying, self-sufficient economy.
3. Vehicles & Auto Parts
Vehicle and auto-part imports totalled Rs 96.79 billion over the ten-month period, a category that tends to swing noticeably with exchange rate movements, tariff and excise policy changes, and shifts in consumer and business confidence. Passenger cars in particular carry some of the highest effective duty rates in Nepal's entire tariff schedule — commonly cited in the 40–240% range depending on engine size and vehicle age — making vehicle imports a meaningful revenue source for the government even as they weigh on the trade balance.
4. Industrial Machinery
Machinery and mechanical appliances were Nepal's third-largest import category at Rs 123.60 billion, reflecting continued investment in construction, hydropower, manufacturing, and agriculture. Notably, the FY 2025/26 budget removed or sharply reduced duty (often to as little as 1%) on machinery used for organic fertiliser production and select hydropower-related equipment — a deliberate policy nudge to lower the cost of building domestic productive capacity, even while the import bill itself keeps growing in the short term.
5. Electronics & Mobile Phones
Electrical machinery and equipment imports reached Rs 112.21 billion over the ten-month period, a category that includes everything from grid infrastructure components to consumer electronics. Mobile phones deserve a specific mention: Nepal imported handsets worth Rs 23.30 billion in just the first six months of FY 2025/26, totalling over 1.25 million devices — a reminder of how much of Nepal's "electronics" import bill is really driven by ordinary consumer demand rather than industrial investment.
6. Iron, Steel & Construction Materials
Iron and steel imports reached Rs 118.31 billion over the ten-month period, underpinning Nepal's ongoing construction boom — roads, buildings, hydropower infrastructure, and post-earthquake reconstruction all draw heavily on imported steel, much of it via China and India. Domestic steel re-rolling exists, but Nepal still depends on imported billets and raw steel inputs for most of its finished construction material.
7. Chemical Fertilizers
Fertiliser imports reached Rs 49.29 billion over the ten-month period — a category entirely dependent on imports, since Nepal has essentially no domestic chemical fertiliser production. This makes fertiliser availability directly sensitive to global supply chains and pricing, with real knock-on effects for domestic agricultural output and food security, which is one reason recent budgets have specifically exempted machinery used in organic fertiliser production from import duty.
8. Gold & Silver
Gold imports reached Rs 18.83 billion in just the first six months of FY 2025/26 — and notably, import volumes held up even as global gold prices rose sharply, reflecting sustained domestic demand for jewellery and gold as a store of value. Gold and silver imports are typically channelled through licensed dealers under Nepal Rastra Bank's regulatory framework, given their sensitivity to foreign exchange management.
Why Argentina Suddenly Became a Major Trade Partner
Five years ago, Argentina barely registered in Nepal's trade statistics. By FY 2025/26, it had risen to become Nepal's third-largest source of imports, worth Rs 116.38 billion, overtaking longtime partners like the United States. The reason is almost entirely one commodity: crude soybean oil and crude sunflower oil, which together account for nearly all of what Nepal buys from Argentina. It's a striking illustration of how a single re-export business — refining imported edible oil for the Indian market — can single-handedly reshape a country's bilateral trade rankings, even though Nepal's exports back to Argentina remain negligible.
FAQs
What is Nepal's single biggest import?
Petroleum products — diesel, petrol, LPG, and aviation fuel — remain Nepal's largest import category by value.
Why does Nepal import so much edible oil if it also exports it?
Nepal imports crude, unrefined edible oil (mainly from Argentina) because it lacks large-scale commercial soybean and sunflower cultivation, refines it domestically, and re-exports the finished product, mostly to India, under preferential tariff treatment.
Which country does Nepal import the most from?
India, supplying over half of Nepal's total imports, followed by China and, increasingly, Argentina.
Is Nepal's import bill likely to shrink soon?
Not without structural change — fuel, edible oil, machinery, and vehicles are all either essential consumption items or investments tied to ongoing infrastructure development, none of which are likely to shrink meaningfully in the near term.
Discussion