Abstract
Import substitution and Export promotion are the widely used government policies for the protection of domestic production and specialization of product for trade competitiveness. Import substitution policies require great attention because of the huge government costs incurred in implementing the policies and might be counterproductive and not necessarily be cost effective amid increased consumer price and government subsidies while compromising the tariff revenue. On the other hand, the government may invest huge sum of money for export promotion policies because of the multiple benefits garnered from export earnings, increased balance of payments and production motivation to producers. Nepal government’s import substitution policies and export promotion policies in horticultural crops were reviewed and subsequent past programs for implementation of such policies in major commodities have been reviewed in this paper. The import export data for the last six years from department of customs and production data from ministry of agricultural development have been collected and analyzed to draw the conclusion with respect to policy coherency. Only few strategic commodities should be selected for import substitution and government subsidies for increased production with levying quarantine rules for SPS and TBT are recommended than imposing tariffs as policy instrument for import substitution of potato, citrus and apple. Production and productivity enhancement programs, export incentives, custom clearance facilitation, trade diplomacy and negotiation, mutual recognition, export destination diversification and product diversification are recommended tools for export promotion.

Keywords: Tariff, SPS, TBT, Trade, Diversification