US tariffs could have little impact on Nepal

Although additional US reciprocal tariff is likely to affect Nepal’s export of certain commodities to the US, the impact on the national economy is likely to be limited considering Nepal’s small export basket, according to experts.

A 10-percentage point increase in tariffs on Nepal’s export to the US could result in 0.0096 per cent decline in Nepal’s Gross Domestic Product (GDP), according to an issue note published by South Asia Watch on Trade, Economics and Environment (SAWTEE), also. The report titled 'Decoding US’ reciprocal tariffs: A Nepali perspective,' authored by Executive Director at SAWTEE Dr Paras Kharel and Senior Research Officer Kshitiz Dahal, provides a Nepali perspective against the rapidly changing international trade landscape due to the US administration’s reciprocal tariffs.

The issue note delves into the implications of the US proposed reciprocal tariff scheme, which could mark a departure from long-standing global trade norms. It also highlights how the shift may impact Nepal, with a focus on Nepal’s exports to the United States, which is its second-largest export destination. While Nepal currently enjoys preferential access to the US market under various schemes, the move toward reciprocity could challenge these preferences and add uncertainty for Nepali exporters. Furthermore, additional duties of 10 per cent on each product exported from Nepal could affect the demand of these products in the US market, and the initially observed tariff advantage is now uncertain given a 90-day pause on the full implementation of reciprocal tariffs scheme and ambiguities regarding how, or whether, the program will continue. 

In conjunction with the publication, SAWTEE organised a roundtable discussion on 'Navigating Nepal-US Trade amid uncertainty' in partnership with Kathmandu University School of Management (KUSOM) today that fostered dialogue on potential policy responses and collaborative strategies to manage emerging trade dynamics.

Addressing the discussion, if Nepal can take advantage of the current situation, Vice Chancellor of Kathmandu University Dr Achyut Wagle stated that Nepal has not been able to create backward linkages in prominent export sectors, for example, "we emphasise on readymade garment sectors but the raw materials, such as textiles, yarns, etc, are all import-dependent. This is not only a trade issue but involves industrial policies and other related policies."

As the world appears to be gravitating towards fragmented trading blocs, Nepal should prepare for acceding to sub-regional and regional trading arrangements, pointed out Chair Emeritus at the SAWTEE Dr Posh Raj Pandey.

Nepal, until it establishes itself as the indispensable part of the global value chain, giving her an upper hand during negotiations, to remain in wait and watch mode, said Senior Fellow at SAWTEE and former finance secretary Madhu Kumar Marasini.

Considering the possibility of Nepal taking advantage of relatively lower tariff to the US compared to other countries, private sector representatives cautioned that this could make Nepal a transhipment hub, meaning other countries exporting to US through Nepal, which would not benefit Nepal in terms of job creation or economic activities, but rather invite further restrictions to Nepali products.

Foreign trade contracts by 2.55 per cent

As the country is engaged into political tug of war, all is not good in economy.

According to the foreign trade data published by the Department of Customs today, imports fell by 2.39 per cent to Rs 1,303.35 billion over the first 10 months of current fiscal year, compared to Rs 1,335.32 billion in the same period last fiscal year.

Likewise, exports also dropped down by 3.61 per cent in the same period.

Despite government's tall claims, foreign trade has been sluggish since the beginning of the current fiscal year, and has still not been able to pick up its pace.

Nepal exported goods worth Rs 126.17 billion in the 10-month of the current fiscal year, compared to Rs 130.90 billion in the same period last fiscal year, the data reveals.

With the drop in imports and exports, total foreign trade also shrink by 2.55 per cent to Rs 1,429.53 billion in the first 10 months of the current fiscal year 2023-24, compared to Rs 1,466.22 billion in the same period of the last fiscal year.

Likewise, the share of exports in total foreign trade shrank to 8.83 per cent, compared to 8.93 per cent in the first 10 months of 2022-23, it reveals, adding that the share of imports, however, increased to 91.17 per cent compared to 91.07 per cent in the first 10 months of the last fiscal year.

Though, Nepal has been trading with 168 countries, the country enjoys a trade surplus with only 34 countries. "Nepal enjoys the highest trade surplus of Rs 385.84 million with Denmark, followed by Afghanistan (Rs 262.01 million) and Norway (Rs 113.66 million)."

Nepal suffered the highest trade deficit of Rs 1,177.18 billion with India, that largest trading partner, followed by China (Rs 729.70 billion) and the UAE (Rs 238.55 billion).

Nepal imported goods worth Rs 1,303.35 billion from India while it exported goods worth Rs 126.17 billion to the southern neighbour.

Likewise, Nepal imported Rs 815.72 billion worth goods from China, whereas exported goods worth Rs 86.02 billion to the northern neighbour.

Petroleum products are, as always, Nepal's largest imports as the country imported diesel, petrol, and liquefied petroleum gas (LPG) with a combined value of Rs 218.48 billion in the 10 months period of the current fiscal year. "Raw materials for steel industries and smartphones were the other biggest imports."

The report also reveals that readymade carpets are Nepal's largest export with export earnings of Rs 8.79 billion, followed by black cardamom (Rs 6.91 billion) and palm oil (Rs 5.62 billion).

Imports increased by 68.13 percent in first quarter

Imports increased by 68.73 per cent to Rs 543.57 billion in the first three months of the current fiscal year.

According to the data from Customs Department, the import expenses surged by 63.73 per cent to Rs 478.52 billion in the first quarter, though the export volume has doubled. However, the export earning in the first quarter that stood at Rs 65.52 billion is almost enough to pay a single commodity -- petroleum products -- bill. "The trade deficit stood at 

The country had imported merchandise worth Rs 292.26 billion in the first quarter of the last fiscal year, due to restriction in trade because of Covid-19 pandemic. 

The worsening trade balance has, however, added pressure in foreign currency reserves, which has been going down in recent months also due to drop in remittance earnings. The forex reserve has depleted pushing the balance of payments (BoP) -- one of the key macroeconomic indicators -- into the red zone. The BoP recorded negative in the past few months also due to a whopping rise in imports along with slow rate of remittance inflows.

Nepal imported Rs 23.32 billion worth diesel, Rs 12.86 billion worth petrol, and Rs 12.18 billion worth cooking gas, apart from kesosene, which comes to around the country's total export earning.

Apart from petroleum products, Nepal imported Rs 11.07 billion worth gold, and Rs 10.17 billion worth silver in the firts quarter of the cirrent fiscal year, despite the government's increament in customs of the silver.

Trade deficit drops but government struggles to meet revenue target

Though, the trade deficit has decreased – as it has wished – it failed to meet the revenue mobilisation putting the Finance Ministry under pressure to manage resources.
The Department of Customs data reveals that the trade deficit – in the first five months of the current fiscal year – has widened by only 6.3 per cent to Rs 533.64 billion as the export jumped by around 27 per cent to Rs 47.61 billion, whereas imports fell by 4 per cent to Rs 581.25 billion. “Processed soybean oil and palm oil have knocked juice, jam and footwear off the list of largest exports to India, pushing the exports up,” the department data reveals. However, Nepal does not produce any soybean or palm oil, and traders import crude oils from Brazil, Argentina, Ukraine, Indonesia, Australia and other countries which they process and export to India without paying a penny in tariffs.
Under the South Asian Free Trade Area (SAFTA) agreement, zero tariffs are levied on goods exported from underdeveloped countries like Nepal, and Nepali traders have been importing crude palm oil from third countries by paying minimum customs duty, and then exporting the finished product to India free of customs duty.
The government, but, failed to meet revenue mobilisation target also due to low imports as the revenue from imported goods shrank by Rs 6 billion between mid-July and mid-December. The department's data reveals that the government collected import taxes worth Rs 150.81 billion, down by Rs 5.52 billion from Rs 156.33 billion collected during the same period last year.
The government has set a target of collecting 45 per cent of the total targeted tax revenue through tariff on imported goods. In the first five months, customs offices collected only 34 per cent of the annual target to collect Rs 447.59 billion from import tariffs. “Out of the total import taxes, the government has targeted to collect Rs 196.62 billion in value added tax (VAT), Rs 187.30 billion in customs and Rs 63.67 billion in excise imposed on the imported goods. But according to Financial Comptroller General Office (FCGO) data, the overall tax mobilisation – as of December – stood at a mere 31.24 per cent of the targeted tax revenue of more than Rs 1 trillion.
In the last fiscal year 2018-19, the government had set revenue collection target at Rs 945 billion, which was later revised to Rs 860 billion. However, the government even missed the revised target by almost Rs 25 billion, according to the FCGO data.
And this fiscal year too, finance minister will fail to meet revenue mobilisation target also due to his own policy to discourage imports of luxury items and automobiles.

BoP records Rs 6 billion surpluses after over a year

The Balance of Payments (BoP) recorded a surplus of Rs 6.05 billion in the first month of this fiscal year – from mid-July to mid-August – compared to a deficit of Rs 24.77 billion in the same month of last fiscal year, according to the central bank.
The BoP has recorded a surplus for the first time since July 2018, due to increase in export volume and reduction in import, though the ballooning trade deficit has not seen any remarkable reduction. The Current Macroeconomic and Financial Situation report of the first month of fiscal year 2019-20 also revealed trade deficit has declined by 11.5 per cent due to higher export earnings and a steep fall in imports, though the transformation in import and export patterns seems ‘unusual’ because the government’s policy adjustments has nothing to do with the change.
“The merchandise imports contracted by 11.5 per cent to Rs 106.73 billion against an increase of 54.3 per cent in the same period of the last fiscal year, whereas merchandise exports rose by 27.7 per cent to Rs 8.84 billion compared to an increase by 3.2 per cent – in the first month of the last fiscal year – largely due to huge quantity export of refined palm oil. Nepal started exporting refined palm oil a few months ago as it imports crude palm oil. “The crude palm oil is refined and then exported again,” according to the traders, who were surprised to find out the increasing export of palm oil in recent months.
However, the government claimed that its policy to discourage import of luxury four-wheelers has bring the imports down. The government has doubled the excise duty on imported vehicles through the budget for the fiscal year 2018-19. The down payment on auto loans has also been jacked up to 50 per cent of the value of the vehicle. The central bank statistics revealed that imports of vehicles and spare parts during the review period fell by 20.3 per cent year-on-year to Rs 6.56 billion.
The reduction in the trade deficit has brought down the country’s current account deficit to Rs 9.37 billion, down from Rs 25.16 billion in the first month of the last fiscal year. “In US dollar terms, current account deficit remained at $84 million in the review period compared to $228.5 million a year ago,” the report reads, adding that the remittance inflows, though marginal, increased by two per cent to Rs 75.40 billion against an increase of 33.1 per cent in the first month of the last fiscal year.
Similarly, the country witnessed an increase in the gross foreign exchange reserves to Rs 1,064.64 billion in mid-August from Rs 1,038.92 billion in mid-July this year.

Strong trade growth rests on policy choices

The World Trade Organisation (WTO) anticipates merchandise trade volume growth of 4.4 per cent in 2018, as measured by the average of exports and imports, roughly matching the 4.7 per cent increase recorded for 2017.
The growth is expected to moderate to 4 per cent in 2019, below the average rate of 4.8 per cent since 1990 but still firmly above the post-crisis average of 3 per cent. However, there are signs that escalating trade tensions may already be affecting business confidence and investment decisions, which could compromise the current outlook.
"The strong trade growth that we are seeing today will be vital for continued economic growth and recovery and to support job creation," WTO director-general Roberto Azevêdo said adding that this important progress could however be quickly undermined, if governments resort to restrictive trade policies, especially in a tit-for-tat process that could lead to an unmanageable escalation. "A cycle of retaliation is the last thing the world economy needs. The pressing trade problems confronting WTO members is best tackled through collective action."
Trade volume growth in 2017 – the strongest since 2011 – was driven mainly by cyclical factors, particularly increased investment and consumption expenditure. Looking at the situation in value terms, growth rates in current US dollars in 2017 (10.7 per cent for merchandise exports, 7.4 per cent for commercial services exports) were even stronger, reflecting both increasing quantities and rising prices. Merchandise trade volume growth in 2017 may also have been inflated somewhat by the weakness of trade over the previous two years, which provided a lower base for the current expansion.
Asia had the fastest trade volume growth of any region in 2017 on both the export side (6.7 per cent) and the import side (9.6 per cent) following two years of tepid expansion
Asia was responsible for much of the recovery of world merchandise trade in 2017 on both the export and import sides. On the export side, Asia contributed 2.3 percentage points to global growth of 4.5 per cent in the latest year, or 51 per cent of the total increase. Asia also added 2.9 percentage points to world import growth of 4.8, or 60 per cent of the overall increase.

Inflation still in double digits

Despite government's claims of having cracked its whip at price rises, the country's inflation is hovering at double digits.
According to the central bank's macroeconomic update, for the 10th month of the current fiscal year, consumer price inflation stood at 10 percent.
In mid-May, belying general expectations that inflation would follow the trend of continuous moderation seen from its peak of 12.1 per cent in mid-January, inflation stood at double digits, reads Nepal Rastra Bank's (NRB) monthly report published today.
"Despite the improved supply of fuel and other consumable items following the return of normalcy in the southern customs points, the reversal in the inflation trend occurred on account of rise in housing rents and education-related expenses," it says , adding, "Of the overall inflation, non-food and services group inflation of 10.4 per cent exceeded the food and beverage group inflation of 9.6 per cent in mid-May."
Among food and beverage items, the prices of pulses and legumes sub-group and the vegetables sub-group continued to remain at a higher level of 23.4 per cent and 20.1 per cent, respectively. The prices of the clothes and footwear sub-group, the housing and utilities sub-group and the alcoholic drinks sub-group saw increment of 17 per cent, 16.4 per cent and 15.9 per cent, respectively, according to the central bank.
Likewise, the report also revealed that Kathmandu Valley is the most expensive place to live in Nepal, geographically. The valley witnessed relatively higher rates of inflation at 11.5 per cent followed by the hilly region at 11 per cent, the mountain region at 9.1 per cent and the Tarai region at 8.6 per cent in mid-May.
Last year, the Kathmandu Valley, the hilly region and the Tarai region had experienced the inflation rates of 6.8 per cent, 7.7 per cent and 6.9 per cent, respectively, the report added.
Supply constraints due to the lingering impact of the April-May 2015 earthquakes and the obstruction at the southern trade routes also fuelled the inflation, widening the gap between prices in Nepal and India.
Year-over-year consumer price inflation of Nepal in the tenth month of the current fiscal year continued to remain at a higher level of 10 per cent compared to that of India at 5.8 per cent showing inflation wedge of 4.2 per cent, the report reads, adding that a year ago, such inflation in Nepal was 7.1 per cent compared to 5 per cent in India reflecting a narrower inflation wedge of 2.1 per cent only.
India's annual consumer price inflation accelerated to a near two-year high of 5.76 per cent in May, driven by surging prices of food products like pulses and sugar, which could dampen hopes of a rate cut at least during the next monetary policy review in August.
Likewise, the blockade during the Tarai-Madhesh protests also pulled the import and export figures down. According to the central bank, in the 10 months of current fiscal year 2015-16, merchandise exports decreased by 21.7 per cent to Rs 55.60 billion while merchandise imports dropped by 4.6 per cent to Rs 599.36 billion. "Exports to India and China decreased by 33.4 per cent and 35.6 per cent, respectively, whereas exports to other countries increased by 4.1 per cent in mid-May," the report says, adding that imports from China increased by 9.5 per cent whereas imports from India and other countries decreased 7.8 per cent and 4.1 per cent, respectively
Exports through Tribhuvan International Airport (TIA) and Dry Port customs office - Birgunj increased, whereas exports through other customs points decreased, the report says, adding, "On the import side, imports through Birgunj Customs Point decreased, whereas imports through other customs points increased. Likewise, trade has not yet resumed through Tatopani Customs Point."
Nepal's trade deficit also contracted – by 2.4 per cent – to Rs 543.76 billion in mid-May compared to an expansion of 10.1 per cent in mid-May last year.
The report also says that decrease in the number of outflow of the Nepali migrant workers has not hit remittance inflow hard yet. "The workers' remittances inflow grew by 10.2 per cent to Rs 538.87 billion till mid-May compared to a growth of 10 per cent in the previous year," it observed, adding that net transfer receipt increased by 11.8 per cent to Rs 628.07 billion. The number of Nepali workers seeking foreign employment, based on final approval, decreased by 22.2 per cent in the 10th month of the current fiscal year, compared to an increment of 8.9 per cent in the same period of last fiscal year.

Cost of inaction higher, set up Economic War Room to handle crisis: Experts

Economists have suggested the government to set up an Economic War Room to fight the current crisis.
Accusing the government of not being serious even after 100 days of the Tarai-Madhes unrest and 2 months of Indian blockade, they said the government should go on a war footing to address the people’s woes.
The government lacks seriousness and has failed to address the people’s woes,” they said, adding that the people have been suffering due to shortages of essentials like cooking gas, petrol and life-saving drugs.
Saying that cost of inaction is higher, they also accused the government of lack of crisis management skills. “The government completely lacks crisis managerial skills,” said industrialist Hari Bhakta Sharma. “The government is ineffective and weak as it has failed to address the crisis,” he said, adding that it has also failed to maintain law and order. "The government, instead of solving the crisis, has only aggravated it."
The apathy of the political parties has also aggravated the crisis, Sharma said calling for diversification of the economy. “Trade diversification does not mean that Nepal imports from China what it used to import from India,” he explained.
Stating that the weak state machinery has fuelled the black market, he suggested the government making the distribution channels more efficient. "The demurrage and detention charges that industrialists have been paying will hurt the economy,” he added.
Urging the government to make clear its industrial and economic policy, the industrialist also gave examples of other countries where the governments had rescued the economy in times of crisis.
Foreign investment will not come to any country where domestic investment is not secure, he said also asking the government to safeguard domestic investment to save jobs too. Rising unemployment is perceived to create security problem later.
Linking the current economic crisis to national security, former member of the National Planning Commission (NPC) Swarnim Wagle said that a country can be either attacked directly with armed forces or the economy can be weakened for takeover.
He suggested analysing the current crisis from four angles: fiscal, monetary, external sector and real sector. “Under fiscal sector, revenue mobilisation is very discouraging,” he said, adding that revenue mobilisation in the first four months is only 70 per cent of target and half that of the same period of last fiscal year. “It will hit development work directly and economic growth in the long run, which is a serious matter.”
From the monetary angle, black marketeering has become rife and people are forced to pay four times the normal price of goods, which will hit the poor most and build up inflationary pressure.
Likewise, exports have dropped by 25 per cent in the first four months, whereas imports have dropped by 35 per cent. The decline in imports will ultimately hit exports also, he said, adding that remittance alone has cushioned the current trade imbalance. “It will pull economic growth down but we cannot yet see the floor of that effect.”
A strong aviation sector however could rescue land-locked countries like Nepal in times of blockades, Wagle suggested.
Asking the government to continue with its second generation reforms to build up economic competitiveness, he said it was necessary to improve interdependency with neighbours. “In normal times too, Nepal must have good trade relations with China, apart from improving customs arrangements with the southern neighbour for more cross-border trade.”
Madan Kumar Dahal, another economist, on the occasion, also said that Nepal Rastra Bank and the IMF have also painted a bleak economic picture. Calculating that the current crisis has caused the Nepali economy to lose Rs 540 billion, he also warned of a humanitarian crisis as there are no life-saving drugs in the hospitals due to the Indian blockade and the Tarai-Madhes unrest. Dahal also suggest the government to declare an emergency to maintain smooth supplies. The government must bring in austerity measures and start a discipline campaign to maintain good governance, he suggested, adding that weak governance has fuelled the black market and spawned a parallel economy, which will further weaken the state and hit the poorest of the poor hard. "The inflation will go out of control from government's hands."

Procedural approvals cause low intra-subregional trade: Study

Procedural approvals for both importers and exporters to transport pulses from Nepal to Bhutan via India takes at least 23 days, according to a report.

"It's no different for the import or export of carpet between India and Nepal," said the study that revealed that 21 clearances for importers take as many as 21 days.

The traders of lentils need as many as 36 documents and 115 copies while orange traders need to carry 32 documents as proof and 95 copies of these documents, detailed the study done by Delhi-based thinktank Research and Information System for Developing Countries (RIS) for Asian Development Bank and UN Economic and Social Commission for Asia and the Pacific has also revealed how trade through three key corridors in the four countries faces major delay because of tardy procedural clearances.

The subregion – in South Asia – comprising India, Nepal, Bangladesh and Bhutan – remains one of the toughest places to move goods due to archaic procedures, it concluded, adding that it may take up to a month for pulses, juices and carpets to move within three countries, when the actual driving time is much less.
The report stated that on an average submission of documents over 80 per cent  is handled manually causing all the more delay to faster clearances in Nepal, Bhutan and Bangladesh. There are issues relating to both the physical and procedural infrastructure, which are hurting trade across the four countries, the report said, adding that physical infrastructure augmentation will take more time and need greater investment, which should be taken up simultaneously. "But there is a need to prioritise process reengineering to reduce huge time lost in getting clearances for import and export of items in the region."

The report also suggested interventions how each country can expedite clearances to boost trade. Likewise, the report also concluded that improvement of road infrastructure remains the key as most of the roads in Bangladesh cannot carry 20 tonnage trucks and it's no good in Bhutan and Nepal.

Banks to provide cash incentive based on new regulation

The central bank has directed banks to provide cash incentives to exporters according to the amended 'Cash Incentives Regulation 2070 BS' that was approved by the cabinet a month ago.
"Class 'A' banks should follow the amended regulation and provide cash incentives to exporters of third country in foreign currency," it directed, asking exporters to claim their cash incentives — minimum of one per cent and maximum of two per cent on the basis of value addition — from the same bank through which they have exported.
The government had brought a cash incentive scheme to promote exports from fiscal year 2010-11. However, exports have not been encouraging also due to the lethargic process of claiming cash incentives.
After complaints from exporters, the government had simplified the cash incentive process and brought an amended regulation a month back.
The amended cash incentive regulation has listed 10 products — processed coffee, semi-processed leather, handicrafts and wooden crafts, crust, handmade paper and its products, refined honey, tea, carpet and woolen products, pashmina and fibre products, and refined herbs — that can claim two per cent cash incentive, but some two dozen products — including flowers, herbs, large cardamom, and carpet — can claim one per cent cash incentive only.
The government can, however, revise the list, whenever it deems necessary.
"Exporters have to submit proof of export document, Department of Industry's recommendation stating the value addition per cent, and documents with a received date of foreign currency in the importer's bank account to claim the cash incentive," according to the amendment.
Exporters can get the cash incentive within seven days, if the Finance Ministry has already provided the fund for them, Nepal Rastra Bank (NRB) said, adding that the central bank has cancelled the earlier regulation.
Despite the government's policy to promote exports through cash incentives, exports have not been encouraging as the country has exported only Rs 1.92 billion more, amounting to Rs 57.16 billion in the nine months of the current fiscal year as compared to Rs 55.24 billion in the same period last fiscal year.
The new regulation also mentions that export houses must provide 50 per cent of the cash incentive to producers. "Exports in Indian currency (IC) will not get any cash incentive," it stated, adding that export houses and industries exporting to a third country in foreign currency will get cash incentive.

Trade deficit widens to Rs 385.29 in nine months

Despite government's repeated claims of export promotion, the country has been able to increase a mere 1.1 per cent export in the first nine months — till mid-April — of the current fiscal year compared to the same period of last fiscal year, according to the figures of Trade and Export Promotion Centre (TEPC).
The country exported Rs 56.53 billion worth merchandise in the nine months, against the import of Rs 441.82 billion pushing the trade deficit up by 25.7 per cent to Rs 385.29 billion, the data revealed, adding that the export-import ratio stands at 1:7.8 in the nine months of the current fiscal year, against the 1:6.5 in the same period of the last fiscal year.
As usual, petroleum product is the largest import of the country with Rs 80.59 billion, whereas textiles — the largest export of the country — stood at Rs 3.96 billion only.
Despite being an agriculture economy, the country has imported Rs 14.35 billion worth cereals, apart from Rs 11.30 billion worth pharmaceutical products and Rs 18.14 billion worth electronic and electrical equipments, it added.
However, the key export items have registered a sharp fall as woolen carpet — the second largest export — witness a drop of 15.6 per cent, cardamom 1.6 per cent, readymade garments 18.7 per cent, and cotton sacks and bags by 22.5 per cent, according to the data.
Nepal's major import markets are India, China, UAE, Thailand and Indonesia, whereas India, US, Bangladesh, China and UK are the major export markets.

Widening trade deficit
Month — Export — Import — Total trade
Seventh — Rs 44.20 billion— Rs 295.96 billion — Rs 384.36 billion Eighth — Rs 50.22 billion — Rs 390.87 billion — Rs 441.09 billion Ninth — Rs 56.53 billion — Rs 441.82 billion — Rs 498.35 billion (Figures of the nine months of current fiscal year. Source: Trade and Export Promotion Centre)

 

Top five import items
Petroleum products — Rs 80.59 billion
Iron & Steel and products thereof — Rs 43.42 billion
Transport Vehicles and parts thereof — Rs 25.08 billion
Machinery and parts — Rs 24.36 billion
Gold — Rs 18.93 billion
(Figures for the nine months of current fiscal year. Source: Trade and Export Promotion Centre) 

Top five export items
Textiles — Rs 3.96 billion
Woolen Carpet — Rs 3.94 billion
Tubes, pipes and hollow profiles of iron and steel — Rs 2.80 billion
Readymade Garments — Rs 2.73 billion
Cardamom — Rs 2.63 billion
(Figures for the nine months of current fiscal year. Source: Trade and Export Promotion Centre) 

Nepal-India Transit Treaty renewed without changes

The Nepal-India Transit Treaty has been renewed without any changes to the existing treaty, though Nepal had been seeking some changes that could have facilitated trade with other countries in and outside the region.

"The transit treaty has been renewed without any changes," according to the Ministry of Commerce and Supplies. The bilateral treaty — earlier renewed seven years back in 2006 March — was set to expire on January 5.

"The treaty has a provision of automatic renewal, until and unless either side needs to add or remove certain provisions," the ministry said, adding that Nepal, had, though sought some changes.

While preparing for the renewal, Nepal had asked India to provide access to five more trade and transit routes between Vishakapatnam sea port and four major customs, rail route between Birgunj dry port and Vishakapatnam, and Rohanpur-Singhabad-Jogbani and Phulbari-Banglabandha.

The Nepali team had also sought an optional port for trade facilitation, which India had also agreed to in principle. The ministry had sent a formal request to New Delhi for a renewal of the transit treaty with changes through the Ministry of Foreign Affairs.

But in the last hour, claiming that India's proposal of imposing additional lock on containers ferrying third country consignments will be against international norms and undermine Nepal's transit rights, the Ministry of Foreign Affairs objected to it, though the Ministry of Commerce and Supplies and importers have been saying that additional lock will not create any hassles.

President of Nepal Freight Forwarders Association Rajan Sharma opined that the country could have gained more, had the treaty seen some changes.

The bilateral transit treaty that confers transit rights through each other’s territory through mutually agreed routes and modalities has offered Nepal 22 transit routes from Kolkata/Haldia for third country trade. "Goods can move by road or rail," it states, adding that the establishment of an inland container depot in Birgunj and extension of the railway line from Raxaul to Birgunj has facilitated direct movement of goods in transit by rail to Nepal.

India has extended Nepal direct transit routes to Bangladesh for bilateral and third country traffic under the treaty that has notified road route through Kakarbitta-Panitanki-Phulbari-Banglabandha corridor and rail route through Radhikapur-Birol interchange point on India-Bangladesh border.

India — the largest trade partner and source of foreign investment — is also the only transit providing country for Nepal.

Nepal’s transit trade is routed through 22 designated routes from India-Nepal border to the port of Kolkata/Haldia. In addition, Nepal’s trade with and through Bangladesh also transits through India.

New Delhi is also providing assistance for the development of cross-border trade related infrastructure including upgradation of four major customs checkpoints at Birgunj-Raxaul, Biratnagar-Jogbani, Bhairahawa-Sunauli and Nepalgunj-Rupediya to international standards, upgradation approach highways to the border on the Indian side, upgradation and expansion of the road network in the Tarai region and broad gauging and extending rail links.