India and Nepal share close and friendly relations characterized by age-old historical and cultural linkages, open border and deep-rooted people-to-people contacts. The multifaceted relations between the two countries have been given a renewed momentum in the last few years through intensified high-level political exchanges, regular meetings of bilateral mechanisms across diverse sectors of cooperation, expanding economic and development partnership, boosting connectivity, cooperative initiatives in water resources and hydro-power sectors, defense and security, and most importantly initiatives to promote people-to-people contacts between our two countries.

India remains Nepal’s largest trade partner, with bilateral trade crossing US$ 7 billion in FY 2019-20. India provides transit for almost the entire third country trade of Nepal. India’s export to Nepal has grown over 8 times in the past 10 years while exports from Nepal have almost doubled. Despite the difficulties due to the pandemic, India ensured uninterrupted flow of trade and supplies to Nepal.

Nepal is India’s 11th largest export destination, up from 28th position in 2014. In FY 2021-22, it constituted 2.34% of India’s exports. Infact exports from India constitute almost 22% of Nepal’s GDP. Nepal’s main imports from India are petroleum products, Iron & Steel, Cereals, Vehicles and Parts, Machinery parts. Nepal’s major items of exports include Soyabean oil, Spices, Jute fiber & products, synthetic yarn and tea. India and Nepal concluded a Memorandum of Understanding (MoU) for long term supply of Urea and DAP fertilizers from India to Nepal under a G2G arrangement on 28 February 2022.

Indian firms are among the largest investors in Nepal, accounting for more than 33% of the total FDI stock in Nepal, worth nearly USD 500 million. There are about 150 Indian ventures operating in Nepal engaged in manufacturing, services (banking, insurance, dry port, education and telecom), power sector and tourism industries. India and Nepal have also signed the Double Taxation Avoidance Agreement Page 6 of 8 (DTAA) in November 2011. The bilateral remittance flow is estimated at approximately $ 3 billion (Nepal to India) and $ 1 billion (India to Nepal)