Kathmandu, December 19:

Finance Minister Dr Ram Sharan Mahat today underscored the need of developing hydropower and exporting it to India to reduce the bulging trade deficit between two countries.

Addressing a seminar on Nepal-India Trade and Economic Relations organised by Nepal-India Chamber of Commerce and Industry (NICCI), he said that growing trade deficit with India can be addressed by developing hydropower projects and exporting it.

He, however, admitted that a lackadaisical attitude in policymaking and implementing levels has been hampering the process.

Stressing the need of change in attitude, Dr Mahat further said that pace of socio-economic development has been slowed down not because of lack of policy and favourable environment, but the lack of aptitude to go along with the changes and negative attitude. “We should stop harbouring suspicions to move forward,” he said.

Dr Mahat urged that more Indian investments should come to Nepal to bridge the growing gap in current account deficit.

Shiv Shankar Mukherjee, Indian ambassador to Nepal said that development of hydropower sector can “kick-start Nepali economy on an upward trajectory of an all round economic growth.

Precious time and resource have been lost due to misplaced arguments and missed opportunities.”

Too often, Nepal’s hydropower sector is discussed in the context of India’s energy demands,” he said, adding that there is an even greater urgency in addressing Nepal’s own huge and rapidly growing power deficit. “It is ironical that despite having a huge hydropower potential, Nepal is dependent on imports to meet its domestic demand and is likely to remain so in the foreseeable future.”

The trend of slowing down of Indian investment to Nepal has not been because of security situation, according to him. “Nepal needs to address some questions like investment incentives, regulatory environment, stability of policy and ability of investors to secure and protect their rights to increase the flow of Indian investment into Nepal,” he added.

Arun Kumar Chaudhary, president of NICCI also complained about lack of forward looking movement in hydropower development. “When we want to begin big projects, including hydropower, it is politicised,” he said.

He also requested India to ensure that non-tariff barriers would not unnecessarily get on the way of trade with Nepal. Chaudhary urged the governments and private sectors from both the countries to devise ways to reduce ballooning trade deficit and address issues related to trade treaty like rules of origin, informal trade and non-tariff barriers.

Dr Shanker Sharma, former vice-chairman of NPC, stressed on the need of avoiding

non-tariff barriers, particularly procedural delays and piles of documentation to boost the bilateral trade. “Avoidance of procedural delays and simplification of documentations could reduce export cost by 30 per cent, which will make products competitive in the markets,” he said.

Surendra Bir Malakar, president of Nepal Chamber of Commerce and Narendra K Basnyat, acting president of Confederation of Nepalese Industries also stressed on the need of devising ways to attract Indian investment in hydropower, which can create a win-win situation for both the countries.

India is Nepal’s largest trading partner and current bilateral trade accounts for more than 65 per cent of total foreign trade. The bilateral trade crossed Rs 160 billion in 2006-07, with balloning trade deficit of Rs 75 billion.

Exports from Nepal have stagnated at Rs 40 billion for last three years, while there are no major investments from India in recent years.