China vs India Trade with Nepal: 8-Month Data Comparison (2025/26)
Nepal's two largest trading partners — India and China — account for approximately 77.5% of all trade. Yet the nature of Nepal's relationship with each country is starkly different. Based on NRB customs data for 8 months of FY 2025/26, here is a comprehensive comparison.
Side-by-Side Trade Comparison
| Metric | India | China |
|---|---|---|
| Exports to (8M 2025/26) | Rs. 156,664.47M | Rs. 983.35M |
| Imports from (8M 2025/26) | Rs. 724,061.21M | Rs. 265,667.03M |
| Trade Deficit | Rs. 567,396.74M | Rs. 264,683.68M |
| Export Growth (YoY) | +25.32% | -53.65% |
| Import Growth (YoY) | +5.14% | +21.21% |
| Export/Import Ratio | 21.64% | 0.37% |
| Share of Total Exports | 81.98% | 0.51% |
| Share of Total Imports | 56.16% | 20.61% |
| Share of Trade Deficit | 51.67% | 24.10% |
India: The Dominant But Slowly Moderating Partner
India remains Nepal's overwhelmingly dominant trade partner:
- 81.98% of Nepal's total exports go to India
- 56.16% of Nepal's imports come from India
- Nepal exports Rs. 21.64 to India for every Rs. 100 it imports — the best bilateral export ratio Nepal has
- India's trade deficit share has declined from 57.09% (2024/25) to 51.67% (2025/26), showing a gradual diversification
- Import growth from India moderated to just +5.14%, the slowest of any trading bloc
Nepal's strong export performance to India (+25.32%) is largely driven by soyabean oil re-exports, cardamom, and processed food products that benefit from geographical proximity and trade preferences under SAFTA and the Nepal-India Trade Treaty.
China: Fast-Growing Importer, Near-Zero Export Destination
China tells a very different story — one of deepening import dependence with almost no reciprocal exports:
- Imports from China surged +21.21% to Rs. 265,667.03M
- China now accounts for 20.61% of Nepal's total imports — up from 19.13%
- Nepal's exports to China collapsed -53.65% to just Rs. 983.35M
- Export coverage ratio: Nepal exports Rs. 0.37 for every Rs. 100 it imports from China
- China's deficit share is growing: 21.98% (2024/25) → 24.10% (2025/26)
Key imports from China include telecom equipment, machinery, electrical goods, and manufactured consumer products — categories where Nepal has no competitive domestic alternative.
Why Nepal Exports So Little to China
The near-zero export ratio to China (0.37%) reflects multiple structural barriers:
- Quality and standards: China's import standards are stringent; most Nepali agricultural and handicraft products struggle to meet them
- Logistics: Despite BRI connectivity projects, cross-Himalayan trade routes remain expensive and unreliable
- Scale: Nepal's export industries lack the volume to serve Chinese market demand
- Competition: Nepal's traditional exports (carpets, handicrafts, herbs) face intense competition in China from other South/Southeast Asian countries
China vs India: Trade Deficit Trajectory
| Partner | Deficit 8M 2024/25 | Deficit 8M 2025/26 | Change |
|---|---|---|---|
| India | Rs. 563,676.14M | Rs. 567,396.74M | +0.66% |
| China | Rs. 217,063.59M | Rs. 264,683.68M | +21.94% |
The India deficit is nearly flat (+0.66%) while the China deficit is accelerating (+21.94%). At current trends, China could represent 30%+ of Nepal's trade deficit within a few years, challenging India's traditional dominance.
Conclusion
Nepal's trade relationship with India is deep, reciprocal (by Himalayan standards), and gradually improving. Its relationship with China is one-sided — Nepal is a consumer of Chinese goods with almost no countervailing export capacity. Closing the China trade gap requires major investments in connectivity infrastructure, product quality upgrades, and bilateral trade facilitation agreements.