Revised Nepal-India Trade Treaty comes into effect

Minister for Commerce and Supplies Rajendra Mahato and his Indian counterpart Anand Sharma signed a revised bilateral trade treaty in Kathmandu today evening. The treaty comes into effect immediately offering an upgraded seven-year pact with provision for automatic renewal every seven years.
“The new treaty retains all the positive aspects of the old treaty,” Indian Trade and Commerce Minister Sharma said, referring to the earlier 1996 trade treaty.
He said the new treaty will have a seven-year validity instead of the earlier five years and will be extended automatically every seven years, creating a “stable framework for bilateral trade and investment”.
The cumbersome Duty Refund Procedure (DRP) has been scrapped to provide Nepal a direct control on the customs duty revenues on import of manufactured goods from India. Besides the Kolkata Port, Nepal can now also avail of the Vishakhapatnam port while four additional land customs stations will be established to facilitate bilateral trade. Also, for the first time, bilateral trade will be allowed by air through international airports connected by direct flights between Nepal and India (Kathmandu/Delhi, Mumbai, Kolkata and Chennai).
The two ministers also signed an Agreement of Cooperation to Control Unauthorisd Trade that will allow export of goods imported by Nepal from India to the third countries without the necessity of carrying out any manufacturing activity in Nepal. This will enhance exports from Nepal to third countries where it has a better market access as compared to India.
India has also agreed to allow Nepal access to the Banglabandh port through Indian territory, allow items like rice, wheat and sugar to be sent to Nepal at a time they are not allowed to be exported to other countries and will authorize the export about 50,000 tonne of fertilizer.
The trade treaty in 1996 had benefitted Nepal but India imposed quota on some of the products like vegetable ghee and acralic yarn revising the 1996 treaty in 2001 after which Nepal’s exports to India plummeted and the trade deficit widened. The revised treaty is hoped to give lease of life to Nepal’s exports and help bridge the ballooning trade deficit that is over Rs 180 billion at present.