India and Nepal have signed a letter of exchange (LoE) to the India-Nepal Rail Services Agreement (RSA) 2004.

A virtual ceremony was held today to exchange notes verbales and signed copies of the LoE, between the two governments.

From the Indian side, the ceremony was led by Sanjay Kumar Mohanty, member of operations and business development at the Ministry of Railways.

From the Nepali side, it was led by Dinesh Bhattarai, secretary at the Ministry of Commerce, Industry and Supplies.

The ceremony was conducted in presence of Ambassador of India to Nepal, Vinay Mohan Kwatra; the Ambassador of Nepal to India, Nilamber Acharya; Joint Secretary (North), Ministry of External Affairs of India, Anurag Srivastava; and Joint Secretary (South Asia), Ministry of Foreign Affairs of Nepal, Tirtha Raj Wagle.

Also present were representatives from the two embassies and concerned ministries of both the governments.

With the entering into force of the LoE, all authorised cargo train operators which includes public and private container trains operators, automobile freight train operators, special freight train operators or any other operator authorised by Indian Railways will be able to utilise the Indian railway network to carry Nepal's container and other freight - both bilateral between India and Nepal or third country from Indian ports to Nepal.

This liberalisation will allow market forces to come up in the rail freight segment in Nepal, and is likely to increase efficiency and cost-competitiveness, eventually benefiting Nepali traders, transporters and the consumer, as per a media release issued by the Indian Embassy.

Further, after this LoE, all kinds of cargoes in all categories of wagons that can carry freight on Indian Railways network within India can also carry freight to and from Nepal. The liberalisation will particularly reduce transportation costs for automobiles and certain other products whose carriage takes place in special wagons. Wagons owned by Nepal Railway Company will also be authorised to carry Nepal-bound freight (inbound and outbound on Kolkata/Haldia to Biratnagar/Birgunj routes) over the Indian Railways network as per IR standards and procedures.

The LoE also updates several other portions of the India-Nepal RSA and brings those in line with latest operational and infrastructure status of Indian and Nepali Railways. It therefore marks another milestone in India's efforts to enhance regional connectivity under the 'Neighbourhood First' policy, the release adds.

A version of this article appears in the print on July 10, 2021, of The Himalayan Times.