A new 5-year trade strategy comes into effect with an expanded list of 32 products

On 17 July 2023, the Ministry of Industries, Commerce, and Supplies (MoICS) introduced its fourth trade development strategy — Nepal Trade Integration Strategy 2023 (NTIS 2023)  — aiming to diversify Nepal’s export products and markets.

The strategy has identified new priority products and services with comparative advantage for export potential and expanded the previous list of 12 to 32 now under five categories.

The strategy paper identifies the US, EU, UK, and Turkey as the largest export markets, apart from India.

The five-year strategy estimates a total budget of Rs 46.32 billion for its implementation. However, this fiscal year, the government has allocated only Rs 40 million budget for the strategy.

Products and services under trade integration strategy receive special treatment to address market barriers and maintain strategic advantage for the competitive industries.

Nepal endorsed its first trade integration diagnostic study in 2004 as the Nepal Trade and Competitiveness Study (NTCS 2004) which analysed Nepal’s trade regime and performance and identified products with a comparative and competitive advantage.

Nepal then implemented updated versions of the NTCS introducing NTIS 2010 and NTIS 2016. The NTIS 2010 identified 12 goods and 7 service areas and charted out action plans in cross-cutting areas and priority export potential sectors with goals to achieve inclusive and equitable trade, increased export, and poverty reduction.

While NTIS 2016 sought to address the outstanding trade and competitiveness challenges confronted by the country’s export sector. 

In doing so, it reduced the NTIS list to 12 products and services from the previous 19, removing lentils, honey, noodles, handmade paper, silver jewellery, and iron and steel from the product list and health, education, engineering, and electricity under the list of services while adding fabrics, textile and yarn, leather and footwear to the list.

It recognised potentials for product and value chain development in priority export sectors (listed in the table) while identifying fruit and vegetable juices; all fabricated steel and metals; lentils; silver jewellery; instant noodles; paper products; wool products; honey; readymade garments; coffee; semi-precious stones; and hydro-electricity as other potential sectors — which are now enlisted in the 2023 strategy.

The 2023 strategy is believed to bring significant advantages to numerous sectors and opportunities for Micro, Small, and Medium enterprises (MSMEs) and pave the way for Nepal’s transition from a Least Developed Country (LDC) to a developing country in 2026.