Nepal-India new trade treaty to be finalised

KATHMANDU: Indian commerce and industry minister Anand Sharma is arriving here next Tuesday to ink the India-Nepal Trade Treaty. The treaty will have a seven-year shelf life unlike the earlier five year provision. However, it will automatically extend every seven years.

The new treaty that will

be co-signed here on Tuesday by Sharma and Nepal’s minister for commerce and supplies Rajendra Mahato will give

the country more time to

provide a more stable framework for bilateral trade and


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 Madhav Kumar Nepal’s five-day visit to New Delhi in August.

The new 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, wuth 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.