Foreign trade refers to exchange of goods from one country to another. There are mainly two components foreign trades. They are export and import. Export refers to the situation where a country supplies surplus goods to other countries. On the contrary, import refers to that situation where a country demands deficit goods constitute the foreign trade of a country concerned.
Nepal is an underdeveloped country with an agrarian economic base. Nepal has no adequate production of agricultural as well as industrial goods. Thus, Nepal imports various goods from India and overseas countries required for the consumption and production. Similarly, surplus good produced in Nepal are exported to other countries of the world. Such export and import of goods constitute foreign trade in Nepal. Thus from this discussion we can define precisely foreign trade that it refer to the transaction of goods and services between two or more countries which incorporates export and import. If the goods are exchanged within the country itself it is called domestic trade.
The history of foreign trade of Nepal is as old as the history of Nepal. In ancient times Nepalese goods were exported China and India. Imports were also made from these two countries. At present also, these two countries which lies in the North and south of Nepal are its major trade partners.