Nepal’s Trade Choking On Infrastructural Fiasco

Nepal is highly dependent on land connections for trade, with nearly 95% of trades using two principal corridor, the Kathmandu–Birgunj corridor (via the East-West and Naubise–Mugling highways) and the East-West Highway. Birgunj itself accounts for nearly half the country's imports, so it is an indispensable trade gateway. Yet these highways are serving many times over the scope for which they were designed. Many sections are still single-lane or narrow, two-lane highways, resulting in perennial traffic bottlenecks. In an analysis by the World Bank, daily traffic loads on the principal sections already reach or surpass the road's design threshold. In practice, an 8–10 hour journey by truck between Kathmandu and Birgunj, would take 4–5 hours in the expected normal situation. Road conditions and susceptibility to rain showers add further delays.

Efficient trade infrastructure is essential for three reasons. First is speed, goods must move quickly across borders without unnecessary delays. Second is cost, transport and logistics expenses should be minimized so traders can save money. Third is smoothness, the entire process—from roads to paperwork, storage, and inspections—needs to be smooth and less complicated. Development of Inland Clearance Depots (ICDs) becomes vital here, with efficient technological fusion in the workflow for efficiency.

However, Nepal has some key challenges. Sirsiya Dry Port at Birgunj, the country's largest ICD, is grossly overcommitted. Spanning 38 hectares, it was initially planned for some 1,586 TEUs but has long been surpassed by trade volumes. In an effort to relieve the strain, the government, with World Bank assistance, initiated in June 2025 an expansion valued at Rs. 397 million to provide extra warehouses as well as parking facilities. So pressing was the need for the expansion that in mid-2024 some 2,300 vehicles, many of them brand-new autos or chassis, sat stranded at Birgunj customs struggling for clearance, an illustration of how port bottlenecks can bring imports to a halt.

Infrastructure also fails to keep abreast. The Narayanghat–Butwal road expansion, ongoing for close to six years, has called for a fourth deadline extension with just roughly 70% of the work completed. In the north, the Rasuwagadhi–Kerung border reopened during April 2023 after 38 months of closure. This route, prior to 2025, had witnessed very fast traffic growth—about 150 trucks daily—mostly consisting of Chinese consumables and electric vehicles. However, on July 8, 2025, when Tibet witnessed a Glacial Lake Outburst Flood, the Friendship Bridge over Rasuwagadhi was destroyed, as was an under-construction dry port of Nepal, which was 80% complete. Indefinitely, the Rasuwagadhi customs remains shut with over 1,100 containers and hundreds of vehicles stranded near the Kodari/Tatopani route, many of which were headed for the Dashain festival.

Nepal has no rail connection with China yet, so northern trade excluding air freight relies on vulnerable road networks. Such proposed trade points as Lipulekh and Hilsa are still remote and partly developed, which again highlights the vulnerability of these connections.

There are also several solutions in the pipeline. Smaller crossings such as Biratnagar (Rani) and Bhairahawa (Sunauli) are especially strategic. Access by road to Bhairahawa in India is only 7 km, and the plan is to increase rail access. India and Nepal in 2025 revised the transit treaty to allow all cargo, not just bulk cargo, to pass by rail to Biratnagar and Bhairahawa. Expanding access by rail has promise to relieve bottlenecks at Birgunj by diverting the flow of containers to the east and the west.

Upgrading road network is also imperative. Completion of the four-laning of the Narayanghat–Butwal route, upgradation of the Mugling–Kathmandu section, and the establishment of bypasses for busy towns would greatly reduce delays. Global evidence, including India's Golden Quadrilateral crossing project, demonstrates how multi-lane expressways connecting major trade centers are able to curb traffic jams.

Decongesting Birgunj Dry Port is also high on the agenda. Enlarging the ICD whilst growing the alternative hubs at Biratnagar and Bhairahawa, along with greater rail utilization, would assist in making trade distribution more balanced. Bangladesh's ICD network, including Pangaon and Kamalapur, offers an instructive illustration on how cargo has the potential to be distributed across several inland depots instead of at the one.

Finally, constructing tunnels to bypass hazardous sections, such as the steep slopes in Sindhupalchok, can greatly improve reliability. Countries like Switzerland and China use tunnels in mountainous regions to reduce travel times, avoid landslide-prone areas, and ensure year-round access. Combined with fast-track roads, tunnels offer shorter travel times, fewer accidents, and the capacity to handle growing trade volumes without worsening congestion.

Nepal’s trade infrastructure is at a critical juncture. Without urgent investment in ports, highways, and modern logistics, bottlenecks will continue to hamper economic growth. Strategic development of roads, railways, and tunnels can turn Nepal’s trade corridors into efficient, reliable arteries of commerce—benefiting traders, consumers, and the national economy alike.

-Rishu Mahaseth, Kathmandu, Nepal (Cambridge International A levels and B.E. in Civil engineering graduate, has a keen interest in transport infrastructure of Nepal.)