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.
Saturday, October 24, 2009
NT tops in transaction, yet fails to save market
Nepal Telecom (NT) topped the chart both in terms of transaction amount and number of share units traded this week -- with Rs 9.28 million for 17,000-unit of shares, but it could neither save Nepse nor the others sub-group that has NT under its belt. The others sub-group dropped by 17.62 points to close at 640.32 points from last Thursday's closing of 657.94 points.
Of the nine sub-groups, only the hydropwer group that gained this week -- adding 7.12 points to reach 821.07 points from last week's closing of 813.95 points.
However, development banks, others, commercial banks, finance and insurance sub-groups plunged, pulling Nepse down by 8.39 points to 601.16 points from last week's closing of 609.55 points.
Development banks lost a whopping 35 points to 624.72 points. Others and commercial banks lost 17.62 points and 11.75 points to drop to 640.32 points and 583.88 points respectively. The books closure of Everest Bank dragged down the commercial banks sub-group. The finance and insurance sub-groups shed 2.55 points and 0.03 points to drop to 624.72 points and 609.29 points, respectively.
Three sub-groups -- trading, hotels and manufacturing -- did not see any trading this week that unlike regular five-day trading witnessed only two-day trading due to festivals.
During the two-day trading, only 67 companies saw their shares traded as against the 93 companies shares traded during the last five-day week. The minimal trading days also made the trading amount plunge by five times to Rs 73.23 million this week from last week's Rs 370.10 million.
The Group-A companies' contribution -- in overall trading -- also dropped to 44.89 per cent from last week's 56.48 per cent while the 78-scrip sensitive index -- a barometer of Group-A companies -- lost 1.90 points to drop to 151.77 points from the earlier closing of 153.67 points. The float index -- calculated on the basis of real transactions -- also dropped by 0.68 point to drop to 57.48 points from the earlier closing of 58.16 points.
Standard Chartered Bank Nepal followed NT in terms of transaction, with Rs 9.17 million. Standard Finance with Rs 4.08 million, Nepal SBI Bank with Rs 3.76 million and Nabil Bank with Rs 3.02 million managed to come in the top five slots.
In terms of number of transactions Pashupati Development Bank topped the chart with 254 transactions this week.
This week, 57.5-million-unit of development bonds were listed in the secondary market but these bonds till date have not seen any trading.
Of the nine sub-groups, only the hydropwer group that gained this week -- adding 7.12 points to reach 821.07 points from last week's closing of 813.95 points.
However, development banks, others, commercial banks, finance and insurance sub-groups plunged, pulling Nepse down by 8.39 points to 601.16 points from last week's closing of 609.55 points.
Development banks lost a whopping 35 points to 624.72 points. Others and commercial banks lost 17.62 points and 11.75 points to drop to 640.32 points and 583.88 points respectively. The books closure of Everest Bank dragged down the commercial banks sub-group. The finance and insurance sub-groups shed 2.55 points and 0.03 points to drop to 624.72 points and 609.29 points, respectively.
Three sub-groups -- trading, hotels and manufacturing -- did not see any trading this week that unlike regular five-day trading witnessed only two-day trading due to festivals.
During the two-day trading, only 67 companies saw their shares traded as against the 93 companies shares traded during the last five-day week. The minimal trading days also made the trading amount plunge by five times to Rs 73.23 million this week from last week's Rs 370.10 million.
The Group-A companies' contribution -- in overall trading -- also dropped to 44.89 per cent from last week's 56.48 per cent while the 78-scrip sensitive index -- a barometer of Group-A companies -- lost 1.90 points to drop to 151.77 points from the earlier closing of 153.67 points. The float index -- calculated on the basis of real transactions -- also dropped by 0.68 point to drop to 57.48 points from the earlier closing of 58.16 points.
Standard Chartered Bank Nepal followed NT in terms of transaction, with Rs 9.17 million. Standard Finance with Rs 4.08 million, Nepal SBI Bank with Rs 3.76 million and Nabil Bank with Rs 3.02 million managed to come in the top five slots.
In terms of number of transactions Pashupati Development Bank topped the chart with 254 transactions this week.
This week, 57.5-million-unit of development bonds were listed in the secondary market but these bonds till date have not seen any trading.
Friday, October 23, 2009
NRNs to lobby for mega projects
The Non-Resident Nepali Association (NRNA) has promised to lobby in its members' respective countries of residence for mega projects for Nepal.
"We have associations in 55 countries around the globe," said NRNA president Dev Man Hirachan. "If we can bring one mega project from each of the 55 countries where there is a National Coordination Council (NCC) lobbying with the governments in those countries, there will be 55 mega projects," he said adding that NRNs could act as bridges between Nepal and the countries of their residence.
"Though NRNs have been investing in small projects since the last six years, the need of the hour is to bring mega investment for the development of Nepal," Hirachan said without elaborating on the type and size of mega projects.
However, he stressed on the creation of a conducive investment environment for new investors to be attracted to Nepal. "We can convince our friends in the country of residence if there is conducive investment environment in Nepal," he opined.
The Nepali government has to enter into an agreement with those countries from where it is planning to attract investment as the issue of dual tax is the key to lure investors. "The investors have to pay tax on their income in Nepal and back home also, making Nepal less investor-friendly for them," said Hirachan. Nepal has to take the initiative for itself to avoid dual taxation to accelerate investment, according to Hirachan, who is residing in Japan for the last three decades and runs IT, travel agencies and gems businesses.
He also repeated the commitment of NRNs to create a $100 million fund. "We will form a task force to decide where to invest the money," he clarified. NRNA is in the process of registration and after the registration, the fund will be created.
"A joint task force of the foreign ministry, Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and NRNA will be formed soon," assured Ganesh Kumar, co-ordinator of the Asia-Pacific of NRNA.
NRNA has formed NCC in 55 countries currently and the number is set to increase as Nepalis have reached in most countries of the globe in recent years.
The diaspora can bring in not only money, but also knowledge. "We are thinking of creating a knowledge bank that would help Nepalis learn new skills and technology," he said.
There is a huge demand for IT professionals in Japan and Nepal be a good source country for IT experts from Nepal. Apart from IT, Japanes are interested in investing on Hydro and tourism, he said.
Thursday, October 22, 2009
Nepse allows some companies to start trading
Some firms -- United Insurance Company, Raghupati Jute Mills, Nepal Bitumin and Barrel, Nepal Finance and Nepal Electricity Authority (NEA) Bond -- have paid their annual listing renewal fee today.
Nepse has also allowed today the trading of Paschimanchal Development Bank and Salt trading Corporation, which have already paid their renewal fee within the time but Nepse -- by mistake -- halted their trading yesterday.
Though, the secondary market has never seen the trading of bonds, it has also frozen the trading of NEA Bond and Nabil Bank's Bonds due to their failure in paying the annual renewal fee. Similarly, it has halted the trading of Nepal Development Bank and Hotel Yak & Yeti. The former has been suspended after the Nepal Rastra Bank filed a case asking for permission to liquidate it at the Court and the later has been not paying the renewal fee for last three years as it wanted to be delisted.
According to the Nepse, it has halted the trading of 19 companies -- including Paschimanchal Development Bank and Salt trading Corporation that have already paid their fee. The renewal fee has to be paid -- as according to the Share Listing Regulation -- within the three months of the new fiscal year that ended on October 17. "Due to their failure in paying renewal fee, the Nepse has halted their trading yesterday -- the first day of the trading of this week after the holiday," Nepse said.
A company has to pay Rs 50,000 renewal fee, if its paid-up capital is more than Rs 100 million. Similarly, a company has to pay Rs 35,000 fee, if its paid-up capital is between Rs 50 million and Rs 100 million. One has to pay Rs 25,000, if the paid up capital is between Rs 10 million and Rs 50 million whereas a company has to pay Rs 15,000, if its paid-up capital is less than Rs 10 million.
Meanwhile, Nepse today also lost -- though a marginal 0.05 point -- to close trading at 601.16 points. But the float index gained 0.04 point to close at 57.48 point.
Api Finance has started its trading from Thursday at Rs 540 per unit of shares. Its 10 units of shares were traded for Rs 5,400 on the first day at the secondary market.
Hotel Yak & Yeti to be delisted
KATHMANDU: Hotel Yak & Yeti -- that has been wanting to be delisted -- could be delisted soon. As according to the rule, if a company doesnot pay annual renewal fee for three consecutive years, it could be delisted. The hotel has not been paying its renewal fee for three consecutive years. The Nepse board has also discussed on the hotel's request to be delisted but has not taken any decision. Only four hotels are listed in the hotels sub-group under Nepse. Hotel Yak & Yeti, Soaltee Hotel, Taragoan Regency (Hyatt) Hotel and Oriental Hotel (Radisson) have listed a total of 24,225,898-unit shares in the secondary market. Except for the Soaltee Hotel that has a paid up value of Rs 10 per unit share others have Rs 100 paid up value per unit share. Hotel Yak & Yeti has listed 2,209,208-unit of shares with a face value of rs 100 per unit.
Nepse has also allowed today the trading of Paschimanchal Development Bank and Salt trading Corporation, which have already paid their renewal fee within the time but Nepse -- by mistake -- halted their trading yesterday.
Though, the secondary market has never seen the trading of bonds, it has also frozen the trading of NEA Bond and Nabil Bank's Bonds due to their failure in paying the annual renewal fee. Similarly, it has halted the trading of Nepal Development Bank and Hotel Yak & Yeti. The former has been suspended after the Nepal Rastra Bank filed a case asking for permission to liquidate it at the Court and the later has been not paying the renewal fee for last three years as it wanted to be delisted.
According to the Nepse, it has halted the trading of 19 companies -- including Paschimanchal Development Bank and Salt trading Corporation that have already paid their fee. The renewal fee has to be paid -- as according to the Share Listing Regulation -- within the three months of the new fiscal year that ended on October 17. "Due to their failure in paying renewal fee, the Nepse has halted their trading yesterday -- the first day of the trading of this week after the holiday," Nepse said.
A company has to pay Rs 50,000 renewal fee, if its paid-up capital is more than Rs 100 million. Similarly, a company has to pay Rs 35,000 fee, if its paid-up capital is between Rs 50 million and Rs 100 million. One has to pay Rs 25,000, if the paid up capital is between Rs 10 million and Rs 50 million whereas a company has to pay Rs 15,000, if its paid-up capital is less than Rs 10 million.
Meanwhile, Nepse today also lost -- though a marginal 0.05 point -- to close trading at 601.16 points. But the float index gained 0.04 point to close at 57.48 point.
Api Finance has started its trading from Thursday at Rs 540 per unit of shares. Its 10 units of shares were traded for Rs 5,400 on the first day at the secondary market.
Hotel Yak & Yeti to be delisted
KATHMANDU: Hotel Yak & Yeti -- that has been wanting to be delisted -- could be delisted soon. As according to the rule, if a company doesnot pay annual renewal fee for three consecutive years, it could be delisted. The hotel has not been paying its renewal fee for three consecutive years. The Nepse board has also discussed on the hotel's request to be delisted but has not taken any decision. Only four hotels are listed in the hotels sub-group under Nepse. Hotel Yak & Yeti, Soaltee Hotel, Taragoan Regency (Hyatt) Hotel and Oriental Hotel (Radisson) have listed a total of 24,225,898-unit shares in the secondary market. Except for the Soaltee Hotel that has a paid up value of Rs 10 per unit share others have Rs 100 paid up value per unit share. Hotel Yak & Yeti has listed 2,209,208-unit of shares with a face value of rs 100 per unit.
Finance Minister positive, budget will pass
The government will run out of expenses in less than a month unless it can lift opposition United Communist Party of Nepal (Marxist) protests in parliament and pass the budget for the fiscal year 2009-10.
But finance minister Surendra Pandey is hopeful that the UCPNM will help pass the budget. "If they will not assist, their combatents in the UN-monitored camps -- along with civil servants and parliamentarians -- will also suffer," he said addressing media at the Reporters' Club in the Valley today.
The parliament must approve this fiscal year's budget by the middle of November or face a likely shutdown of the administration, with the government unable to pay employees. "We have already stopped the minister's salary," he said.
The UCPNM lawmakers have held up proceedings in the parliament for a couple of months with protests against the president for rejecting the dismissal of the army chief by their government. They have been asking for the correction of the President's move, which literally means the fall of incumbent Prime Minister Madhav Kumar Nepal-led government.
The decision by the President -- who officially commands the military -- led Maoist leader and then Prime Minister Pushpa Kamal Dahal 'Prachanda' to resign. A present coalition government took over in May.
President Dr Ram Baran Yadav had overruled Dahal's attempts to fire the then army chief, saying they were unconstitutional.
If the budget could not be passed, the government has to bring ordinance. "But there is no need to go through ordinance," Pandey said suggesting the UCPNM to go to street "but not to obstruct parliament and let the budget pass."
He claimed that budget and Civil Supremacy is different issue. "Reinstatement of chief of army staff by president and budget is completely a different issue," he tried to convince the former guerrillas. "Budget is an issue of public concern," he added.
Delay in passing the budget has creating problems, he said adding that ministers pay has already been stopped.
Due to delay in passing the budget, government has been facing problems in development expenditure, he said adding that the trend will encourage spending of development budget at the end of fiscal year that should not happen.
What's in Constitution?
KATHMANDU: according to the Interim Constitution of Nepal, Article 96 Votes on Account:
(1) Notwithstanding anything contained in this Part, a portion of the expenditure estimated for the financial year may, when an Appropriation Bill is under consideration, be incurred in advance by an Act.
(2) A Vote on Account Bill shall not be submitted until the estimates of revenues and expenditures have been presented in accordance with the provisions of Article 92 and the sums involved in the Vote on Account shall not exceed one-third of the estimate of expenditure for the financial year.
(3) The expenditure incurred in accordance with the Vote on Account Act shall be included in the Appropriation Bill.
Mega Cities planned
KATHMANDU: Finance Minister Surendra Pandey said that government is planning three mega cities. But he didnot elaborate. He also informed that government is promoting developing activities in seven priority sectors. "The government is bringing policies for maximum land utilisation, increasing self-reliance on agriculture, tourism promotion and using forestry for economic benefit," he detailed. Revenue collection has been satisfactory so far, he said adding that the government is raking more revenue in comparison to last year.
But finance minister Surendra Pandey is hopeful that the UCPNM will help pass the budget. "If they will not assist, their combatents in the UN-monitored camps -- along with civil servants and parliamentarians -- will also suffer," he said addressing media at the Reporters' Club in the Valley today.
The parliament must approve this fiscal year's budget by the middle of November or face a likely shutdown of the administration, with the government unable to pay employees. "We have already stopped the minister's salary," he said.
The UCPNM lawmakers have held up proceedings in the parliament for a couple of months with protests against the president for rejecting the dismissal of the army chief by their government. They have been asking for the correction of the President's move, which literally means the fall of incumbent Prime Minister Madhav Kumar Nepal-led government.
The decision by the President -- who officially commands the military -- led Maoist leader and then Prime Minister Pushpa Kamal Dahal 'Prachanda' to resign. A present coalition government took over in May.
President Dr Ram Baran Yadav had overruled Dahal's attempts to fire the then army chief, saying they were unconstitutional.
If the budget could not be passed, the government has to bring ordinance. "But there is no need to go through ordinance," Pandey said suggesting the UCPNM to go to street "but not to obstruct parliament and let the budget pass."
He claimed that budget and Civil Supremacy is different issue. "Reinstatement of chief of army staff by president and budget is completely a different issue," he tried to convince the former guerrillas. "Budget is an issue of public concern," he added.
Delay in passing the budget has creating problems, he said adding that ministers pay has already been stopped.
Due to delay in passing the budget, government has been facing problems in development expenditure, he said adding that the trend will encourage spending of development budget at the end of fiscal year that should not happen.
What's in Constitution?
KATHMANDU: according to the Interim Constitution of Nepal, Article 96 Votes on Account:
(1) Notwithstanding anything contained in this Part, a portion of the expenditure estimated for the financial year may, when an Appropriation Bill is under consideration, be incurred in advance by an Act.
(2) A Vote on Account Bill shall not be submitted until the estimates of revenues and expenditures have been presented in accordance with the provisions of Article 92 and the sums involved in the Vote on Account shall not exceed one-third of the estimate of expenditure for the financial year.
(3) The expenditure incurred in accordance with the Vote on Account Act shall be included in the Appropriation Bill.
Mega Cities planned
KATHMANDU: Finance Minister Surendra Pandey said that government is planning three mega cities. But he didnot elaborate. He also informed that government is promoting developing activities in seven priority sectors. "The government is bringing policies for maximum land utilisation, increasing self-reliance on agriculture, tourism promotion and using forestry for economic benefit," he detailed. Revenue collection has been satisfactory so far, he said adding that the government is raking more revenue in comparison to last year.
Wednesday, October 21, 2009
World Bank sheds light on power woes
It takes 73 days and needs to fulfill six procedures in Nepal to get electricity connection, according to 'Getting Electricity - A Pilot Study by the Doing Business Project' by World Bank.
However, four procedures to obtain an electricity connection is enough in Iceland that takes only 22 days whereas in Afghanistan it takes 424 days.
Getting Electricity -- the two-and-a-half-year project -- presents findings on the kinds of constraints entrepreneurs around the world face in getting access to electricity and illustrates patterns in connection processes. The study also tracks all the procedures, the time, and the cost required for a business to obtain an electricity connection for a newly constructed building.
However, in Nepal the cost of not having the electricity is higher than the cost of connection as the country reels under long hours of power outage. "The industries here have not been able to utilise their full capacity due to irregular electricity supply," said an industrialist.
World Bank Enterprise Surveys in 89 economies show that firms consider electricity one of the biggest constraints to their business. The constraints stem from inadequacies in several aspects of electricity service-access to electricity, availability of electricity and reliability of supply-as well as from cost.
"Electricity matters for private businesses, along with other infrastructure services such as roads, water and telecommunications. Where the quality and accessibility of infrastructure services are good, they encourage investment, productivity and growth. But where they are poor, companies' productivity and growth suffer," according to the report.
Many businesses lack access to electricity connections and so are prevented from moving into higher-value-added activities that rely on electricity-based technologies. In 2005, according to the International Energy Agency, more than a quarter of the world's population lacked access to electricity. South Asia has the lowest electrification rates.
Businesses also care about the cost of both the electricity connection and the electricity supply-because electricity-related expenditures eat up a significant share of their revenue.
Managers responding to World Bank Enterprise Surveys estimated that on average their spending on electricity amounts to four per cent of their annual sales-while that on all other infrastructure services like fuel, communication services and water combined accounts for 6.4 per cent.
Among the 140 economies surveyed for Getting Electricity, Ukraine ranks in the bottom 10 on the number of procedures required to connect a new customer to electricity. Economies such as Denmark, Germany, Japan and Mauritius make it much easier for businesses to connect to electricity. The pilot study sheds light on the interactions of businesses with distribution utilities. In doing so it covers only a small part of electricity service for the 140 economies surveyed. The survey has detailed the efficiency and cost of the services provided to commercial customers by distribution utilities, the complexity of procedures, and the resources expended by businesses in obtaining a connection.
"In the 10 economies with the fewest procedures, the process of obtaining an electricity connection takes only 56 days on average and in the 10 economies with the most procedures, it is 215 days," the report says.
The study also finds that connection delays increase where opportunities are missed to streamline approvals with other public agencies; where customers face multiple procedures related to the quality and safety of the internal wiring; where utilities do not have the materials needed to connect customers readily available.
However, four procedures to obtain an electricity connection is enough in Iceland that takes only 22 days whereas in Afghanistan it takes 424 days.
Getting Electricity -- the two-and-a-half-year project -- presents findings on the kinds of constraints entrepreneurs around the world face in getting access to electricity and illustrates patterns in connection processes. The study also tracks all the procedures, the time, and the cost required for a business to obtain an electricity connection for a newly constructed building.
However, in Nepal the cost of not having the electricity is higher than the cost of connection as the country reels under long hours of power outage. "The industries here have not been able to utilise their full capacity due to irregular electricity supply," said an industrialist.
World Bank Enterprise Surveys in 89 economies show that firms consider electricity one of the biggest constraints to their business. The constraints stem from inadequacies in several aspects of electricity service-access to electricity, availability of electricity and reliability of supply-as well as from cost.
"Electricity matters for private businesses, along with other infrastructure services such as roads, water and telecommunications. Where the quality and accessibility of infrastructure services are good, they encourage investment, productivity and growth. But where they are poor, companies' productivity and growth suffer," according to the report.
Many businesses lack access to electricity connections and so are prevented from moving into higher-value-added activities that rely on electricity-based technologies. In 2005, according to the International Energy Agency, more than a quarter of the world's population lacked access to electricity. South Asia has the lowest electrification rates.
Businesses also care about the cost of both the electricity connection and the electricity supply-because electricity-related expenditures eat up a significant share of their revenue.
Managers responding to World Bank Enterprise Surveys estimated that on average their spending on electricity amounts to four per cent of their annual sales-while that on all other infrastructure services like fuel, communication services and water combined accounts for 6.4 per cent.
Among the 140 economies surveyed for Getting Electricity, Ukraine ranks in the bottom 10 on the number of procedures required to connect a new customer to electricity. Economies such as Denmark, Germany, Japan and Mauritius make it much easier for businesses to connect to electricity. The pilot study sheds light on the interactions of businesses with distribution utilities. In doing so it covers only a small part of electricity service for the 140 economies surveyed. The survey has detailed the efficiency and cost of the services provided to commercial customers by distribution utilities, the complexity of procedures, and the resources expended by businesses in obtaining a connection.
"In the 10 economies with the fewest procedures, the process of obtaining an electricity connection takes only 56 days on average and in the 10 economies with the most procedures, it is 215 days," the report says.
The study also finds that connection delays increase where opportunities are missed to streamline approvals with other public agencies; where customers face multiple procedures related to the quality and safety of the internal wiring; where utilities do not have the materials needed to connect customers readily available.
Nepal, India to finalise revised trade treaty
The revised Nepal-India Trade Treaty that would have been signed within the one month of Prime Minister Madhav Kumar Nepal's India visit in August, is finally going to get signed in Kathmandu next week.
Indian commerce and industry minister Anand Sharma is arriving here on Tuesday to ink the revised Treaty. The treaty will get a seven-year shelf life unlike the earlier five year provision. However, it will automatically extend every seven years.
The revised treaty that will be co-signed here on Tuesday by Sharma and minister for commerce and supplies Rajendra Mahato will give the country more time to provide a more stable framework for bilateral trade and investments.
The two ministers will also sign a new agreement upgrading the 1996 agreement to control unauthorised trade from third countries. Both agreements had been initialised during Prime Minister Nepal's five-day visit to New Delhi in August.The trade treaty will also 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. This indicates ending the existing complicated 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.
The new trade treaty will also have India enhance the time limit for temporary import of machinery and equipment into India for repair and maintenance from three to 10 years. Besides, 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. All these items will have duty free access to India without any quantitative restriction.
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 new LCS are Maheshpur/Trutibari (Nawalparasi); Sikta-Bhiswabazar; Laukha-Thadi; and Guleria/Murtia. Bilateral trade by air will be allowed through Kathmandu/Delhi, Mumbai, Kolkata and Chennai airports.
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.
The two sides will also undertake measures to reduce/eliminate non-tariff, para-tariff and other barriers that impede promotion of bilateral trade.New Delhi has agreed to establish a joint mechanism, comprising local authorities, to resolve problems arising in clearance of goods at customs points and the two sides will review and simplify the existing administrative arrangements for operationalisation of fixed quota for acrylic yarn, copper products and zinc oxide.
Sharma will also be attending the South Asia Free Trade Area (SAFTA) agreement meeting of SAARC commerce ministers in Kathmandu. Also in the pipeline is a meeting of commerce secretaries of both countries in Kathmandu as well as of the Joint Committee on Water Resources to expedite the Pancheswor Multipurpose Project.
Indian commerce and industry minister Anand Sharma is arriving here on Tuesday to ink the revised Treaty. The treaty will get a seven-year shelf life unlike the earlier five year provision. However, it will automatically extend every seven years.
The revised treaty that will be co-signed here on Tuesday by Sharma and minister for commerce and supplies Rajendra Mahato will give the country more time to provide a more stable framework for bilateral trade and investments.
The two ministers will also sign a new agreement upgrading the 1996 agreement to control unauthorised trade from third countries. Both agreements had been initialised during Prime Minister Nepal's five-day visit to New Delhi in August.The trade treaty will also 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. This indicates ending the existing complicated 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.
The new trade treaty will also have India enhance the time limit for temporary import of machinery and equipment into India for repair and maintenance from three to 10 years. Besides, 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. All these items will have duty free access to India without any quantitative restriction.
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 new LCS are Maheshpur/Trutibari (Nawalparasi); Sikta-Bhiswabazar; Laukha-Thadi; and Guleria/Murtia. Bilateral trade by air will be allowed through Kathmandu/Delhi, Mumbai, Kolkata and Chennai airports.
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.
The two sides will also undertake measures to reduce/eliminate non-tariff, para-tariff and other barriers that impede promotion of bilateral trade.New Delhi has agreed to establish a joint mechanism, comprising local authorities, to resolve problems arising in clearance of goods at customs points and the two sides will review and simplify the existing administrative arrangements for operationalisation of fixed quota for acrylic yarn, copper products and zinc oxide.
Sharma will also be attending the South Asia Free Trade Area (SAFTA) agreement meeting of SAARC commerce ministers in Kathmandu. Also in the pipeline is a meeting of commerce secretaries of both countries in Kathmandu as well as of the Joint Committee on Water Resources to expedite the Pancheswor Multipurpose Project.
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