Nepal's Trade and Energy Vulnerability Tied to India

Deadly floods destroyed Nepal’s main overland trade route with China, highlighting the challenges Nepal faces in reducing its economic dependence on India, which supplies about 60 per cent of its imported goods. Meanwhile, cargo train operations resumed through the Sunsari–Morang Industrial Corridor, allowing goods from third countries to be transported directly by rail after a treaty amendment. Nepal’s goal to become a major hydropower exporter is complicated by its reliance on India as the primary buyer and exclusive transit route for exports to Bangladesh.

Nepal's economic strategy is heavily intertwined with India, which serves as its largest trading partner and provides essential market and transit access. This structural dependency creates vulnerabilities, particularly regarding trade routes and the export of hydropower, which is crucial to Nepal's economic vision.