Birgunj customs revenue heavily dependent on petroleum and vehicle imports

KATHMANDU: Revenue collection at the Birgunj Customs Office — Nepal’s key trade gateway with India — remains heavily concentrated in petroleum products and vehicle-related imports, highlighting structural dependence on a narrow import base within the country’s customs revenue framework.

According to customs data for the first six months of the current fiscal year, the Birgunj Customs Office collected Rs 116.58 billion in total revenue. However, the composition of that revenue shows a dominant contribution from fuel and transport-related goods, underlining vulnerability to fluctuations in global oil prices, cross-border trade dynamics, and domestic demand for vehicles.

Petroleum products alone generated Rs 37.85 billion in revenue during the six-month period, making it the single largest revenue source for the customs office. This means nearly one-third of total collections are tied directly to fuel imports, a pattern that reflects Nepal’s heavy reliance on imported energy.

The second-largest revenue contributor was the import of vehicles and their spare parts, which brought in Rs 13.98 billion. This segment includes automobiles, commercial transport vehicles, and automotive components, all of which are major taxable goods due to customs duties, excise, VAT, and other border levies.

Information Officer Uday Singh Bista of the Birgunj Customs Office stated that the office’s revenue structure is primarily dependent on petroleum imports and transport equipment. His remarks underscore how customs performance is closely linked to consumption trends, infrastructure expansion, and mobility-related demand in Nepal’s economy.

Beyond fuel and vehicles, several industrial and consumer goods also made notable contributions:

Iron and iron-based products: Rs 6.83 billion

Textile and garment imports: Rs 5.26 billion

Electrical machinery, equipment, and parts: Rs 4.91 billion

These categories indicate steady demand from the construction sector, manufacturing activities, and urban consumption patterns. Iron and steel imports, in particular, are often viewed as a proxy for infrastructure and real estate activity.

In the consumer goods segment, alcoholic beverages generated Rs 1.83 billion in customs revenue, while cosmetic and beauty products contributed Rs 1.81 billion. Though smaller in volume compared to industrial imports, these items typically attract high tax rates, making them important from a revenue-efficiency standpoint.

Birgunj, which handles a large share of Nepal’s third-country trade via the dry port and integrated check post, plays a pivotal role in the national revenue system. Customs duties remain one of the government’s primary revenue pillars, and performance at Birgunj often significantly influences overall fiscal outcomes.

The data also reflects broader macroeconomic realities. Nepal’s production base remains limited, resulting in strong import dependence for energy, transport, construction materials, and consumer goods. While this supports short-term revenue mobilization, it also exposes government finances to external shocks such as oil price volatility, exchange rate pressures, and trade disruptions.

The concentration of customs revenue in a few high-value categories raises policy questions for fiscal planners. A slowdown in vehicle imports due to tighter credit, higher interest rates, or policy restrictions could quickly impact revenue. Similarly, global fuel price corrections or shifts toward alternative energy could alter the revenue landscape over time.

For now, however, petroleum and transport-related imports continue to anchor Birgunj Customs’ performance, reinforcing its role as a critical node in Nepal’s trade, taxation, and economic activity chain.