The devastating flash floods in Nepal have begun to create a fresh supply-chain challenge for India, with hundreds of cargo trucks stranded at the Sonauli border in Uttar Pradesh and road connectivity inside Nepal severely disrupted.
A queue of around 16 km of Indian cargo trucks had formed at the Sonauli border as vehicles waited to enter Nepal, with traffic extending towards Nautanwa. While the Sonauli crossing itself was not directly hit by the flooding, damaged roads and disrupted connectivity deeper inside Nepal have slowed the movement of goods towards Kathmandu and other destinations.
The disruption is significant because India is by far Nepal’s largest trading partner. Bilateral merchandise trade reached around $9.38 billion in FY2025-26, accounting for more than 60% of Nepal’s total external goods trade. Nepal also sends more than 80% of its goods exports to India.
For logistics operators and exporters, however, the immediate concern is not simply the size of bilateral trade but the concentration of trade through a limited number of road and rail corridors.
Nepal’s landlocked geography makes its supply chains particularly dependent on surface transport. The Raxaul-Birgunj corridor handles roughly two-thirds of Nepal’s trade, while the Bhairahawa-Sunauli gateway is an important route for commercial vehicles carrying heavy machinery, automobiles and consumer goods.
Which sectors are most exposed?
The impact is likely to be felt most sharply in sectors where Nepal relies heavily on regular movement of Indian supplies and where delays can quickly translate into higher inventories, shortages or production disruptions.
1. Petroleum and fuel
Petroleum products represent the largest category of India’s exports to Nepal. Nepal’s imports of refined petroleum and related fuel products, the bulk of which come from India, were valued at more than $2.2 billion in 2025.
Any prolonged disruption to road connectivity could therefore put pressure on fuel distribution, particularly if alternative routes cannot absorb the diverted cargo.
2. Iron, steel and construction materials
Iron and steel are another major component of India-Nepal trade. India exported approximately $724 million of iron and steel to Nepal in 2025.
A prolonged logistics disruption could affect construction activity and infrastructure projects by delaying the movement of steel, metal products and related materials.
3. Automobiles and machinery
Automobiles and machinery are also among India’s principal exports to Nepal. In 2025, India exported approximately $479 million in vehicles and $506 million in machinery to the country.
These categories are particularly vulnerable to border congestion because they involve high-value cargo that requires predictable delivery schedules, dealer inventories and access to inland markets.
4. Food and agricultural commodities
Cereals are another major Indian export to Nepal, with exports worth about $410 million in 2025.
Delays in the movement of food commodities could have a more immediate impact on markets, particularly if road disruptions persist and inventories begin to tighten.
5. Pharmaceuticals and essential goods
India also exported around $250 million worth of pharmaceutical products to Nepal in 2025.
Unlike many other categories, pharmaceutical supply chains are particularly sensitive to prolonged delays because hospitals, pharmacies and distributors need predictable replenishment. Any extended disruption could therefore make route prioritisation and alternative logistics arrangements increasingly important.
The bigger logistics vulnerability
The latest disruption highlights a structural challenge for Nepal: trade diversification is difficult when the physical movement of goods remains concentrated around a handful of cross-border gateways.
India currently has two operational rail freight routes into Nepal, through Raxaul-Birgunj and Jogbani-Biratnagar, while integrated check posts are operational at Birgunj, Nepalgunj and Biratnagar. An ICP at Bhairahawa is also under construction.
This infrastructure provides alternatives, but shifting large volumes from a disrupted road corridor is not instantaneous. Cargo may need to be rerouted, customs processes adjusted and trucking capacity repositioned.
For Indian exporters, the immediate impact is likely to be longer transit times, higher inventory carrying costs, truck detention and potential delivery penalties. For Nepal, the consequences could extend to shortages of fuel, food, industrial inputs and consumer products if connectivity remains impaired.
The floods therefore represent more than a temporary border congestion problem. They underscore the need for greater multimodal connectivity, resilient border infrastructure and contingency routes across the India-Nepal trade network.
With bilateral goods trade already at nearly $9.4 billion annually, the ability to keep these corridors functioning during natural disasters is becoming increasingly important for both countries.
