New Delhi, Oct. 19 -- India's exports to Nepal recorded one of the steepest declines among its major trading partners in September, as youth-led protests and a political transition in the Himalayan nation disrupted cross-border trade. Shipments to Nepal fell 16.6% year-on-year (y-o-y) to $516.62 million, even as exports to other key markets such as Spain, China, and Brazil surged, reflecting India's ongoing push to diversify its trade base.

The sharp fall underscores how political unrest in Kathmandu can quickly shake up one of New Delhi's closest economic relationships. The turmoil stalled logistics and hit India's export of key goods-from petroleum and steel to pharmaceuticals and food items-highlighting the fragility of India's overla...