Police arrested two of them on complaints by two Nepalese bee-keepers. Acting on information provided by the two, the police then nabbed 14 others.
"Following suspicion over quality of honey being sold by the duo, we handed them over to the police," Thakur Prasad Dawadi, Chief of the Federation of Nepal Bee-Keepers (FNBK), told the police.
"However, one of them fled. But the police while searching for him busted a racket involved in producing artificial honey using sugar and alum," said Sanjay Raut, a police spokesman in Chitwan district.
The Indian nationals were later released on bail, police said.
Police seized around two quintals of artificial honey, alum, sugar and other raw materials and burnt them.
A kilogramme of honey generally costs around Rs 700. But the arrested men were allegedly found selling it to the villagers at prices ranging from Rs 100 to Rs 200.