Imports from India to cost additional Rs 3.6bn
Kathmandu, June 7
Traders will have to bear additional cost of Rs 3.6 billion as transportation and detention charges within a year while importing goods from India. This additional burden will be added as the Indian side has relocated the existing Raxaul customs office to the recently built Integrated Check Post (ICP) without the completion of the ICP in Nepal.
Construction of the ICP in Nepal has been delayed and only 70 per cent of the work has been completed till date. The ICP in Nepal, which is being constructed with support from the Indian government and by an Indian contractor, will take another seven months to be completed if all construction works are on schedule.
The Indian government has provided support for construction of ICPs in Nepal for the integrated development of border areas to improve people-to-people contact and enhance trade transactions between the two countries. Initiated in May 2011, the ICP was projected to be completed within 15 months. But it has already taken over five years and the required infrastructure is yet to be built.
As India has inaugurated and started operations of the ICP on its side from last week, the Ministry of Commerce, Department of Customs and private sector players of Nepal have requested the Ministry of Foreign Affairs to write to the Indian government to delay the operation of the ICP on its side. They have cited that if the ICPs on both sides do not come into operation simultaneously then transportation cost and detention charges will increase for Nepali traders as goods imported from India will have to be transported for an additional 21 km for customs clearance procedures.
One example is the case of bulk cargo ferried via rail from India. The goods will now have to be reloaded in trucks and dispatched to the ICP on the Indian side for customs clearance procedures. “It will increase the cost and time of trade,” said Prakash Singh Karki, president, Nepal Freight Forwarders’ Association.
As per the estimates of Nepal Intermodal Transport Development Board (NITDB) — which manages ICPs and Inland Clearance Depots — Nepali traders will have to bear additional cost of Rs 3.6 billion in a year.
Two-third of the country’s trade with India is being conducted through Birgunj route. Around 1,500 trucks enter Nepal every day, and they will have to pay additional Rs 5,000 as transport charge for goods to be sent to the ICP for customs clearance procedures. The total cost in a year amounts to Rs 2.7 billion.
On the other hand, the trucks/trailers have to cross four railway crossings to reach the new customs office on the Indian side. It could take at least five additional hours for the customs clearance because the trucks/trailers could be stopped at the railway crossings for at least 30 minutes during the movement of trains.
Around 100 shipping line containers enter through Birgunj on trucks/trailers per day. So, if a container is detained for one additional day it will have to pay up to $250. The total cost of such detention could amount to Rs 900 million a year.
Ashish Sinha, first secretary (Commerce) at the Indian Embassy in Kathmandu, said that India has completed construction of ICP on its side and started its operation. He further said that there was no agreement that ICPs on both sides should be started at the same time.
The Birgunj Chamber of Commerce and Industry (BCCI), among other private sector organisations, has been lobbying with the Indian government for the operation of ICPs to be started simultaneously on both sides. “If the Indian side does not consider the matter then Nepal-India trade will be full of hassles at the border point which will not only increase the cost and time but also pose a threat of unauthorised trade,” said Ashok Temani, former president of BCCI.
NITDB Executive Director Laxman Basnet said that the unilateral move by India to relocate existing customs office to ICP is a deviation from the objective of ICP development at border points of the two countries. He stressed that ICPs on both sides should come into operation at the same time.