India, Nepal seek to ease trade, transit bottlenecks as commerce recovers

India and Nepal are looking to ease bottlenecks in trade and transit as bilateral merchandise trade recovers from a two-year decline through fiscal year 2024 (FY24), with the two countries reviewing market access, customs procedures, border infrastructure and connectivity at a bilateral meeting earlier this week, India's commerce ministry said in a statement on Friday.

Bilateral merchandise trade between India and Nepal fell from a peak of about $11.02 billion in FY22 to $8.92 billion in FY23 and $7.87 billion in FY24—a cumulative decline of roughly 28.5%. It has since recovered to $9.39 billion in FY26, according to commerce ministry data published by the Embassy of India in Kathmandu.

India's exports to Nepal were $7.45 billion, while Nepal's exports to India stood at $1.94 billion. India is Nepal's largest trading partner, accounting for about 62.3% of Nepal's total external trade, according to the same official data. Nepal was India's 12th-largest export destination in FY26.

Quick answers to key questions

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QUESTIONS

India and Nepal are discussing measures to improve market access, customs procedures, border infrastructure, and connectivity, aiming to ease trade and transit bottlenecks.

Bilateral merchandise trade between India and Nepal declined due to various factors, leading to a cumulative drop of roughly 28.5% from FY22 to FY24 before starting to recover.

India and Nepal are planning to strengthen customs cooperation through pre-arrival exchange of information, electronic verification of certificates of origin, and greater customs automation and digitalization.

Yes, continued cooperation on food safety and agricultural products is essential to facilitate legitimate trade and ensure compliance with standards and phytosanitary requirements.

The India-Nepal Inter-Governmental Sub-Committee serves as an institutional mechanism for examining trade-related issues and facilitating bilateral trade and transit between the two countries.

The India–Nepal Inter-Governmental Sub-Committee (IGSC) on Trade, Transit and Cooperation to Control Unauthorised Trade met on 16-17 September at Vanijya Bhawan in New Delhi.

The Indian delegation was led by Ujjwal Kumar Ghosh, joint secretary, Department of Commerce, while the Nepalese delegation was led by Buddha Bahadur Gurung, joint secretary, Ministry of Industry, Commerce and Supplies, according to the commerce ministry statement.

The two sides discussed measures to expand market access for products from both countries, including agricultural and dairy products, food items, pharmaceuticals, medical devices and AYUSH products. They also reviewed standards, food safety and phytosanitary requirements.

Customs cooperation and trade facilitation were another focus. Discussions included pre-arrival exchange of information, electronic verification of certificates of origin, and greater customs automation and digitalisation.

The aim was to facilitate legitimate trade while strengthening compliance mechanisms and preventing misuse of preferential trade arrangements, the commerce ministry said.

Transit and connectivity were also prominent, with the two sides reviewing rail and road links, freight movement, Integrated Check Posts and land-port infrastructure. They discussed improving the use of existing infrastructure and addressing operational bottlenecks affecting bilateral and transit trade.

The meeting also covered cooperation on standards, food safety, plant quarantine and conformity assessment, including institutional cooperation and capacity-building initiatives.

India and Nepal further emphasized continued cooperation among relevant agencies to facilitate legitimate cross-border trade and address unauthorized trade and commercial fraud.

India's key exports to Nepal include petroleum products, iron and steel, automobiles, machinery and cereals. Nepal's exports to India include cardamom, rolled iron sheets, edible oil, juices, plywood and jute, according to official trade data.

The IGSC is an institutional mechanism for examining trade-related issues and facilitating bilateral trade and transit. Both sides agreed to maintain close engagement through established mechanisms and pursue time-bound follow-up on issues requiring further technical examination.

India and Nepal share close historical, cultural and economic ties, with India also an important source of investment in Nepal, the ministry said.

About the Author

Harsh Kumar is a policy reporter at Mint (HT Media Group), where he covers the Ministry of Commerce and Industry along with key departments of the Ministry of Finance, including the Department of Economic Affairs (DEA) and the Department of Financial Services (DFS). With over five years of experience in business and economic journalism, he has developed strong expertise in tracking policy developments and their wider economic impact.<br><br>He has previously worked with Business Standard, Moneycontrol, and Outlook Money, where he reported extensively on banking, financial services, and the broader economy. Over the years, he has built a reputation for delivering accurate, insightful, and impactful stories, supported by a keen eye for detail and a consistent track record of breaking exclusive news.<br><br>An alumnus of Jamia Millia Islamia, Harsh closely follows regulatory changes and key economic trends shaping India’s financial and industrial landscape. His reporting aims to simplify complex policy issues for a wider audience while maintaining depth and credibility.<br><br>Outside of work, he enjoys tracking policy developments, finding scoops, and travelling, reflecting his curiosity about how economic decisions shape everyday life.

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