The economy of Butwal centers around education, ment of Batauli Bazar at the edge of the hills in old Butwal. Presently the main trading centre are near Traffic Chowk and Puspalal Park. Numerous shops sell Chinese and Indian goods. Butwal also has small and medium scale manufacturers of woodwork, ironsheet, metalware and aluminium sheet. There are rice mills including Siddhababa Rice mill,Aryal Rice Mill(Jharbaira-Murgiya) and Sita rice mill. Butwal is also famous for gharelu udyog.
An influx of students from nearby hilly regions contributes to Butwal's economy. Additional income is remitted by expatriate Nepalis and from Gurkha Soldiers employed by the Indian and British Armies
