The opening of the Kakarbhitta-Phulbari-Banglabandha transit route on August 31, 1997, facilitated the growth of trade between Nepal and Bangladesh.

Experts have cautioned that the current political unrest in Bangladesh could impede Nepal's trade, particularly the signing of the country's first electricity export agreement with the energy-hungry country.

On July 28, a power trade deal between Bangladesh, India, and Nepal was to be signed. The accord called for the export of 40 MW of electricity from India to Bangladesh.

Since gaining independence in 1971, Bangladesh has been through its worst political crisis to date. Amid intense anti-government demonstrations on Monday, Prime Minister Sheikh Hasina announced her resignation and left.

"Bangladesh cargo trucks have not moved in more than 15 days. Rajendra Sangraula, senior vice president of the Nepal Freight Forwarders Association, stated that the containers that were prepared for shipment out of Nepal were placed on hold. "Cargo movement will continue until the situation stabilizes."

Located in northern Bangladesh, Banglabandha is a significant inland port that was built to serve as a trading hub for Nepal via the Asian Highway. The Siliguri Corridor, a 52-kilometer section of Indian territory, divides the three countries. On the Indian side of the border is Phulbari.

Known by many as "Chicken's Neck," the Siliguri Corridor links the northeastern states of India with the nation's interior. Bhutan is located on the northern side of the corridor, with Bangladesh and Nepal on each side.

Following the August 31, 1997, opening of the Kakarbhitta-Phulbari-Banglabandha transit route, bilateral trade between Bangladesh and Nepal started to grow.

According to Sangraula, "we used to receive 20–25 cargo trucks from Bangladesh at normal times."

According to traders, exports have not increased significantly despite possible trade prospects with Bangladesh because of the country's 35 percent import charge.

According to Sangraula, Nepal has been importing a lot of jute, which is used as a raw material for clothing, as well as branded ready-made clothing from companies like Adidas and Nike.

The delivery of the requested items would be delayed for Nepali traders who have already opened Letters of Credit (LC).

According to Sangraula, the domestic industry—which imports raw materials from Bangladesh—will be the most negatively impacted. Considering the situation in Bangladesh, producers may also need to search for other markets.

There is Rs4.78 billion in commerce between Bangladesh and Nepal overall. The most recent fiscal year, which concluded on July 15, saw a 30.13 percent decrease in Nepal's imports from Bangladesh. The Department of Customs reports that over the previous year, Nepal's imports decreased to Rs4.22 billion.

During the review period, exports also decreased by 3.37 percent to Rs554.66 million. During that time, Nepal's trade deficit with Bangladesh was Rs3.67 billion. Between 2014 and 2015, Nepal and Bangladesh had a trade deficit.

During the previous fiscal year, Nepal's main imports were juice, toilet paper, oil cakes and other solid soybean leftovers, medication, lead-acid accumulators, and raw jute.

According to Sangraula, the bilateral agreement, which has been in the works for 15 years, may be impacted in the long run by changes in the political structure. The Motor Vehicle Agreements with Bangladesh, Bhutan, India, and Nepal will also be impacted.

There will be effects on trade if the crisis lasts for a long time. Like in Sri Lanka, however, things might eventually return to normal in Bangladesh, according to Paras Kharel, executive director of South Asia Watch on Trade, Economics, and Environment.

Bangladesh has significant export potential for Nepal, according to a trade expert, but this potential has not yet been realized. The majority of the lentils that Nepal produces are currently exported to Bangladesh.

According to Kharel, BBIN and BIMSTEC might not receive much attention from Bangladesh's new government. "Trade between two countries may not change in the upcoming days, staying the same."

According to Kharel, the import of power may also be put on pause for a while, but it will still proceed because of their necessity.

A plan to import 40 MW of power from Nepal was accepted by the Bangladesh Power Development Board in June by the Cabinet Committee on Government Purchase of Bangladesh.

In five months, Nepal intends to sell 144,000 megawatt-hours (MWh) of electricity for 6.4 cents (US dollars) per unit.

Before India sends the comparable amount to Bangladesh, Nepal will send energy to India via the 400KV Dhalkebar-Muzaffarpur cross-border transmission line.

According to a SAWTEE study on commerce between Bangladesh and Nepal, the country's exports to Bangladesh have primarily consisted of agricultural goods, with lentils accounting for about 90% of exports during the previous five years.

As Nepal gets closer to leaving the Least Developed Country (LDC) category, it will become more important to look into other markets in order to lessen the effects of tariff increases in some of its main trading partners. The analysis states that there is a great deal of room to grow bilateral trade relations with Bangladesh.

Although there are a number of obstacles Bangladesh must overcome, experts believe that the planned preferential trade agreement—which has been under discussion since 2019—may be able to lift this restriction.

This year, too, a commerce secretary-level meeting between Nepal and Bangladesh convened in Kathmandu in April to improve economic ties could not achieve a decision on the much-delayed bilateral preferential trade agreement between the two countries.

Bangladesh and Nepal have been considering starting direct bus service between their respective capitals since 2015.

The bus ride from Kathmandu to Dhaka is anticipated to take a whole day, covering a distance of around 1,184 miles.

The suggested route goes 510 kilometers from Dhaka to Banglabandha, then 56 kilometers from Banglabandha to Kakkarbhitta, Nepal, via Panitanki, then 618 kilometers from Kakkarbhitta to Kathmandu. From Kakkarbhitta, it takes approximately 11 hours to reach Kathmandu.