On 01 July 2009, restrictions on the import of religious handicrafts, mainly statues, from Nepal into Tibet became effective. Non-commercial imports for religious purposes will now only be possible for officially accredited religious institutions, and their imports will have to be authorised, and the transactions supervised, by the appropriate Religious Affairs Bureaus. Although no official reasons have been given for the new policy, it appears that the move by the Chinese authorities is aimed at placing trans-border religious links, and possibly the use of religious funds, under closer scrutiny, while protecting the local markets from Nepali imports.

Over the centuries, Nepal has been the source of some of the most highly valued religious icons in Tibet, in particular statues and other metal goods. What was a traditionally flourishing industry was disrupted in the 1960s and 1970s, forcing many Nepalese craftsmen to give up their businesses or convert them into making cheap articles for the tourist market. There was a revival in the 1980s but it was short lived, largely because Tibetan's impoverishment meant that volume of trade was almost non-existent. It is only in the last ten years, and particularly in the last seven years, that the trade in high-quality, large statues has once again boomed, fuelled by demand from religious institutions, and individuals, in Tibet. The Kathmandu Valley, and in particular the city of Patan (Lalitpur), is today, as it was in the past, the centre of production of such items, and the artisans behind it mostly belong to the Newar ethnic group. Although most orders come from Tibetan regions, there is also a growing demand for Nepali-made Tibetan Buddhist paraphernalia in the Chinese mainland. While this reflects an increasing interest in Tibetan Buddhism amongst Chinese people (Han), Tibetan exotic 'curios' in general are currently very fashionable. Official statistics about the trade are unreliable, but insiders estimate that its volume is very substantial, certainly in terms of Nepalese standards.

The new restrictions were announced at very short notice. The Nepali authorities were informed only on 23 June 2009 through their consulate in Lhasa. Announcements in the Chinese language were circulated on the PRC side of the border, leaving the Nepalis unclear as to what the exact conditions of the restrictions would be. As the news spread, traders and artisans worked frantically in order to deliver existing orders before the deadline.

Part of the rationale behind the move seems to be an effort by the Chinese authorities to regulate border trade. Many orders placed by Tibetan buyers remain beyond the control of the authorities as they are placed informally and the items are then brought into Tibet via various delivery points where the presence of the security forces is sparse. In this way, the transactions avoid the scrutiny of the PRC bureaucracy and with that formal and less formal fees linked to trans-border trade.

The Chinese authorities are also known to be suspicious of the close links between religious institutions within Tibetan regions and in Nepal (orders are often placed through monasteries or clerics in Nepal), as well as with traders and manufacturers there. The new regulations effectively limit the scope of such contacts, as they will be placed under the scrutiny of the state organs that regulate religious life in the name of state and Party. These organs may also use the new rules to get a better hold on the handling of religious funds as, on many occasions in the past, they have been critical of the use of resources, particularly donations, for the purchase of costly objects like large statues, calling them an obstacle to development.

There is also an underlying assumption that the authorities intend to limit the import of religious items because they are anxious to develop a domestic industry to cater for the demand from monasteries etc, as well the related tourist market. Locally produced religious items at present are of lesser quality and lack the authenticity of Nepali-made goods and so far they are not as popular with buyers. A similar protectionist development was recently observed in the tourism trade. In the run-up to the Beijing Olympics, tourism-related personnel, like porters, cooks, guides and others, of Nepali nationality but belonging to ethnic groups related to Tibetans and consequently hardly discernable, through their names and physical features, from Tibetans were largely denied business visas for Tibet. After the Olympics, they have still found it difficult to work in Tibet, apparently because Chinese nationals, some Tibetans, but largely other nationalities, are replacing them.

Nepali traders and artisans admit to being deeply concerned about the impact the new regulations will have on the future of their businesses, but they are also cautious about upsetting China. They are not openly critical and have so far limited their actions to urging Nepalese officials to convey their concerns through diplomatic channels. Some hope that, while the direct export of religious items into Tibet and China seems likely to become more difficult in the near future, buyers might be enticed to the Kathmandu Valley to purchase religious items there, thus assuring the continuation of the industry. Already, at present, much of the metal work sold to tourists in Tibet is brought from Nepal by Chinese Muslims (Hui). With many details of the new restrictions still vague, only the future will tell how the trade will develop.