Kathmandu, August 10 :

The government of India is going to release Rs 1.6 billion as budgetary support to Nepal government as a grant assistance in a next few days, Indian ambassador to Nepal Shiv Shanker Mukherjee told a gathering of businessperson and intellectuals, organised by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) today.

As India has already began implementing the Rs 15 billion economic assistance package as per the announcement made during the recent visit of Nepal’s prime minister Girija Prasad Koirala to India, the budgetary support is the first that India has provided to any country, Mukherjee informed.

Mukherjee reiterated that India extends its hand of support to Nepal at a time when Nepal prepares to embark on the path of economic rehabilitation, recovery and long-term growth. “Even in difficult times, India remains committed to Nepal’s economic development.”

He said that a team of Indian Oil Corporation (IOC) is visiting Nepal this week with a view to reschedule the outstanding dues on account of sale of petroleum products to Nepal.

NOC, according to Mukherjuee, owes NRs 6 billion to IOC, which is growing at an alarming rate. He said that business leaders have the responsibility to support and share the burden of rationalisation of petroleum prices in Nepal. “Four per cent additional duty of customs removed by India through a recent notice stands as per India’s commitment to PM Koirala during his visit.”

Mukherjee said that few products still do exist under the four per cent duty bracket. He assured the gathering to remain engaged in such issues in days to come. This additional duty was levied on imports from all countries to India, but has been waived exclusively for Nepal, which goes beyond the letter and spirit of India’s commitment under the bilateral treaty.

On the aspect of market access, the ambassador expressed his disappointment saying that the government of Nepal continues to reduce, year after year, the margin of preference given in import duties on Indian goods.

“Nepal’s exports to India have grown ten times since 1996. Indeed, since 1996, almost 90 per cent increase in Nepal’s exports has been on account of India, which now absorbs nearly 70 per cent of Nepal’s export. The treaty has helped diversify and expand Nepal’s industrial base and attract investments from India.”

Nepal needs to do more to bridge the trade deficit, the ambassador suggested. As Indian tariff rates fall and as India becomes part of more FTAs, Nepal needs to redefine the principles on which it hopes to remain competitive in the Indian market.

Chandi Raj Dhakal, president of FNCCI, said that removal of four per cent additional duty of customs by India would provide a breathing space for Nepali exports to India at a time when trade gap of about five billion rupees is taking place every month. Dhakal was also seeking removal of the four per cent additional duty of customs on items like readymade garments, stone aggregates, beer, fabric, polyester items, and aluminum products.

Prof Madan K Dahal of Tribhuvan University commented that there is a lack of communication among Indian big investors about Nepal’s policies. Prof Dahal asked Indian’s help in reducing trade deficit that Nepal suffers at present. He also urged for bringing a better exchange rate parity between Nepali and Indian currency.