Yawning gulf between Nepal's import, export

Though total exports expanded by 12.4 percent in the first month of this fiscal year in comparison to a rise of 4.5 per cent in the same month last fiscal year, exports to India went up by only 6.6 per cent.
Though according to Nepal Rastra Bank's (NRB) data the rise in exports to India was attributed to the rise in the exports of polyester yarn, thread, jute goods, textiles and copper wire rod, overall export to the largest trading partner has not been satisfactory. Export is not going up but import is growing fast.
In the total trade, import's share stands at 80.4 per cent and exports at less than one-fourth -- at 19.6 per cent -- widening the gap between import and export.
Since India is the largest trading partner of Nepal, and the negligible export to India has hurt the trade balance creating a huge deficit of over Rs 108 billion with a single country.
However, entrepreneurs are hoping that the revised trade treaty between Nepal and India will accelerate Nepal's exports to India.
"The revised trade treaty -- the outcome of two years' negotiations -- provides additional facilities to Nepal's export trade," a trader said categorically adding that the implementation is -- as always -- yet another factor that could either help boost or bust exports to India.
After the signing of the treaty by minister for commerce and supplies Rajendra Mahato and his Indian counterpart Anand Sharma on Tuesday, the treaty will have a seven-year shelf life. The two ministers will also sign a new agreement upgrading the 1996 agreement to control unauthorised trade from third countries as such trade has also hit Nepal.
The over one month belated signing of the bilateral trade treaty was been initialled during Prime Minister Madhav Kumar Nepal's five-day visit to New Delhi in August.
The revised trade treaty will see bilateral trade being conducted in Indian rupees (IRs) at par with trade in convertible currency in respect of tax rebates and other benefits available to such trade. It is expected to simplify the current mechanism of tax refunds.
The switch will provide Nepal direct control over customs duty revenues on the import of manufactured goods from India. Other tax rebates and export promotion benefits will also become available on exports from India to Nepal, with the combined impact making imports from India cheaper both for sale and further manufacture in Nepal.
According to the treaty, India will allow several new items to the list of primary products Nepal wants to export, like floriculture products, wheat flour, bran, husk, bristles, herbs, stone aggregates, boulder, sand and gravel. "Duty free access of these goods without any quantitative restriction to India will help boost Nepal's exports," said the trader.
Apart from that, India will also facilitate export under the Most Favoured Nation (MFN) treatment of articles manufactured in Nepal which do not fulfil the criteria for preferential access and establish four additional Land Customs Stations (LCS) and open air traffic for bilateral trade.
The treaty will boost Nepal's technical standards, quarantine and testing facilities and related human resource capacities. Both countries have agreed to facilitate cross-border flow of trade through simplification, standardisation and harmonisation of customs, transport and other trade-related procedures and development of border infrastructure.