By Dipesh Ghimire
Nepal's Gold Imports Plunge Even After Duty Reduction as Buying Power Falls
Nepal’s gold imports have witnessed a sharp decline of nearly 50% over the past 11 months as soaring gold prices and tightening customs regulations deterred formal purchases. According to data from Nepal Bankers’ Association, only 1,333 kilograms of gold were imported as of the first week of Jestha (mid-May) in the current fiscal year 2081/82. This is down 49.71% compared to the same period last year when 2,650.5 kilograms were brought into the country.
Decline in Demand Amid Rising Prices
The domestic gold market has seen a significant price hike in the past year. The price of hallmark gold per tola (11.66 grams) has hovered close to NPR 2,00,000, hitting a maximum of NPR 197,900 and a minimum of NPR 181,800 in this fiscal year. In contrast, the previous fiscal year recorded a minimum of NPR 134,500 and a maximum of NPR 186,000, indicating a 43% year-on-year price surge.
According to Shree Steel and the Federation of Gold and Silver Dealers' Association, this price hike has dampened consumer demand significantly, especially among middle-income buyers. Vice President of the association, Diyes Ratna Shakya, noted that consumers perceive the current price hike as unsustainable and unrealistic, reducing their willingness to buy.
Crushed Purchasing Power and Economic Slowdown
The fall in demand is not just due to price—it’s deeply linked to the broader economic stagnation and declining household savings over the past two to three years. Post-COVID recovery in Nepal’s economy has been weak, leading to reduced consumer purchasing power. Shakya emphasized that even though economic activity has resumed, consumption hasn’t bounced back, particularly for luxury items like gold.
Customs Duties and Smuggling to Blame
A major contributor to the declining formal imports is Nepal’s high customs duty on gold, previously set at 20%, while India's rate stands at just 6%. This 14% difference creates a strong incentive for gold to be smuggled into Nepal via the open border with India. As a result, cheaper, illegal gold often satisfies market demand, bypassing official import channels and depriving the government of much-needed revenue.
To combat this, the Nepali government reduced the gold and silver customs duties to 10% in December 2024, six months after the hike. However, this delay allowed smuggling networks to expand, and the market has already adapted to parallel supply chains. According to Shakya, unless Nepal and India synchronize customs policies, smuggling will remain rampant.
Stockpile & Import Trends
As per the Nepal Bankers’ Association:
1,333 kg of gold was imported up to Jestha 3, 2081.
Of this, 88.5 kg remains unsold in bank stockpiles (Agricultural Development Bank, NIC Asia, and Nabil Bank).
Some of this gold was imported as recently as Baisakh 2 (mid-April).
Yearly gold imports have seen a continuous drop:
Fiscal Year | Gold Imported (kg) |
|---|---|
2081/82 (Till Jestha) | 1,333 |
2080/81 | 2,650.5 |
2079/80 | 2,916.5 |
2078/79 | 5,053 |
2077/78 | 3,924.5 |
2076/77 | 2,400 |
This data confirms that gold imports have dropped 73.62% compared to FY 2078/79, showcasing a steep three-year decline.
Analysis & Takeaways
Market Dynamics: Rising global prices and currency depreciation have made gold an expensive asset class in Nepal.
Policy Gaps: Delayed adjustments in customs duties and lack of enforcement along the border have fueled the informal market.
Consumer Behavior: Lack of trust in price stability, reduced disposable income, and ongoing economic uncertainty are reducing formal gold consumption.
If Nepal aims to boost formal gold imports and improve customs revenue, it must:
Align customs policy with India to close smuggling loopholes.
Enforce border surveillance more stringently.
Restore consumer confidence by stabilizing inflation and improving economic activity.
