Key Highlights
- Nepal's iron and steel exports to India have declined by 68.67% during the first 11 months of the current fiscal year.
- Export earnings have dropped from Rs15.42 billion to Rs4.83 billion, resulting in a loss of Rs10.59 billion.
- Indian safeguard duties and delays in BIS certification have emerged as the primary reasons behind the sharp decline.
- Nepali manufacturers are urging their government to initiate high-level diplomatic discussions with India.
- The development highlights the growing influence of trade protection measures on regional steel flows.
Introduction
Nepal's iron and steel industry is facing one of its toughest export challenges in recent years after India's safeguard duty significantly impacted shipments across the border. According to recent trade data, Nepal's exports to India have fallen by nearly two-thirds, leading to a substantial decline in foreign exchange earnings and raising concerns over employment and industrial production. The downturn reflects the growing impact of trade policy on regional steel markets, particularly for neighbouring countries that depend heavily on India as their primary export destination. With India continuing to strengthen its trade defence measures, the issue has become a major concern for steel manufacturers and policymakers in Nepal.
Why Have Nepal's Steel Exports Declined?
The sharp decline is primarily linked to India's safeguard duty on selected steel products, which was introduced to protect domestic producers from rising imports. Alongside the safeguard duty, Nepali manufacturers have also faced challenges in obtaining Bureau of Indian Standards (BIS) certification, delaying approvals for several export products. These regulatory hurdles have disrupted production planning, reduced export competitiveness and forced many manufacturers to either reduce shipments or suspend exports altogether. Industry representatives argue that Nepal, as a Least Developed Country (LDC), should receive preferential treatment rather than being subjected to the same safeguard measures applied to larger exporting nations.
Market Analysis
India remains Nepal's largest market for iron and steel exports, making any policy change immediately visible across the country's manufacturing sector. During the first eleven months of the current fiscal year, export earnings declined from Rs15.42 billion to Rs4.83 billion, resulting in a revenue loss exceeding Rs10.5 billion. Such a sharp contraction not only affects steel producers but also impacts employment, government revenue and overall industrial activity. The situation also demonstrates how non-tariff measures such as certification requirements can influence trade almost as significantly as customs duties themselves.
Industry Impact
Several Nepali manufacturers have called for immediate government intervention through bilateral negotiations with India to resolve the issue before additional restrictions are introduced. Industry participants are also concerned that India may adopt further measures against imports, particularly products manufactured using Chinese-origin raw materials, which could create additional uncertainty for exporters. While certain products have resumed exports under the newly introduced Saral SIMS framework, many manufacturers continue to face operational challenges because BIS approvals remain pending. Unless these issues are addressed through policy dialogue, Nepal's steel exports could remain under pressure in the coming months.
Metalsbuy Market Pulse Insight
India's safeguard duty has achieved its objective of protecting domestic steel producers by reducing import volumes, but its impact has extended beyond major exporting countries to neighbouring economies such as Nepal. The development illustrates how trade defence measures increasingly shape regional steel flows and influence investment decisions across South Asia. For Indian steelmakers, lower imports may provide better pricing support and stronger domestic market stability, while neighbouring exporters will need to diversify markets or strengthen compliance with evolving regulatory requirements. The situation will also be closely watched by regional trade bodies as it could influence future bilateral trade discussions between India and Nepal.
Conclusion
The sharp fall in Nepal's iron and steel exports serves as another reminder that trade policies have become as influential as market demand in determining cross-border steel flows. Safeguard duties, quality certifications and import monitoring systems are increasingly shaping the competitive landscape for steel exporters across the region. While India continues to prioritise domestic industry protection, neighbouring exporters will need to adapt through policy engagement, market diversification and compliance improvements. The outcome of future negotiations between the two countries will be closely monitored by steel producers, traders and market participants across South Asia.