Direction of Foreign Trade of Nepal

International trade is the common characteristics of all countries due the interdependency among the economies. Theory of comparative benefits suggests that Nepal is experiencing the widening trade deficit i.e. heavy increase in imports and declining export. There are many factors that influence the trade deficit such as low investment, poor technological settings, obstacles in movements, deterioration in industrial relation, uncertainty in the energy supply, government's slow decision making process. These factors have not been helpful for export promotion. Nepal's trade is largely depends on India both in import and export. Nepal is less capable to take advantages from liberalization economic policy, integration with sub regional, regional, and world economy. Nepal's economy is alarming with the uncontrolled trade deficit which is increased by 33% percent than last year. Nepal's international trade is dominated with Indo-Nepal trade. It is time to review the economic policy to decrease the trade imbalance