The Nepal-India commerce secretary-level talks, popularly known as inter-governmental committee meeting, concluded in the Capital recently. What were the major outcomes of the meet?

The inter-governmental committee (IGC) meeting primarily agreed to review different existing treaties related to trade and commerce between the two countries. One of the major agendas highlighted by Prime Minister KP Sharma Oli during his visit to the southern neighbour recently was Nepal's increasing trade deficit with India, which has become a major problem for Nepal to concentrate on economic agendas. Thus, the issue regarding widening trade deficit between the two countries and measures to narrow down this gap were also raised in the IGC meeting with due priority. In a bid to reduce the trade gap, Nepal had been seeking review of different trade treaties since long. The commerce secretary-level talks this time agreed to comprehensively review the different economic treaties between the two nations and this is a major outcome of the meeting. We have agreed to review the Nepal-India Trade Treaty to address different trade hurdles existing in bilateral trade with India. Similarly, the meeting also concluded to review existing transit agreement with India and the Railway Service Agreement (RSA). The need to review the transit treaty was felt so as to address different transit issues including the inland waterways issue raised during PM Oli's visit to India. Similarly, the comprehensive meeting between the two governments on RSA could not be held since 2012 though both Nepal and India have undergone contextual changes in recent years. India has adopted different new policies regarding railway services in recent years and so has Nepal. Especially, the Indian Prime Minister Narendra Modi-led government has been welcoming private sector in the infrastructural development sector in recent years including in railway services. Both Nepal and India will sit together soon focusing on RSA. The IGC meeting also discussed on different other issues regarding border infrastructure and export hurdles that a few Nepali goods are facing in India.

So, when will the review process of these treaties and RSA begin?

The two governments will soon begin the process of reviewing all these treaties. Regarding the Nepal-India Trade Treaty, the meeting has set a timeframe to sit together for discussions within the next three months. Similarly, we will send a concept note regarding transit treaty to the Indian government soon before starting the review process of the treaty. Likewise, the meeting has also agreed to sit together to further discuss on the RSA within the next few months. I believe that the two governments will reach a level whereby we will exchange a few documents regarding the review of these treaties and agreement within the next four months.

The Nepal-India Trade Treaty was renewed for a period of seven years in October 2016 without any substantial changes. As the two governments have agreed to review it this time what are the major changes likely to be made?

As I mentioned earlier, we will have a comprehensive review of the Nepal-India Trade Treaty, which will include reforming multiple provisions. Overall reform of the treaty could not take place since many years. We had reviewed the treaty in 1991 and made some changes through Letters of Intent in the following years. We also reviewed the treaty in 2009. However, as the context of trade between the two nations has changed over the years, we are preparing to review the treaty comprehensively this time to address multiple issues that have arisen as bilateral trade barriers between the two nations. We have already accomplished necessary groundwork to review the treaty. Now we will start consultations with stakeholders.

In 1996, when the trade treaty was revised various preferences were given to export Nepali goods to India. Can we expect the treaty to be revised this time as it was done in 1996? 

Undoubtedly, we will give high priority to issues concerning export of Nepali goods to India and enhance bilateral trade this time. The trade treaty witnessed some changes in 1991, 1996, 2002 and 2009. Data shows that Nepal's trade deficit with India in between 1991-92 and 1996-97 was around 48 per cent on average. However, such deficit with India in between 1996-97 and 2003-04 was reduced to almost 38 per cent. In this short span of time, Nepal's trade gap with India came down by 10 percentage points. Now, while analysing Nepal's trade with India in between 2003-2004 and 2016-17, data shows that country's trade gap with India has increased to almost 62 per cent on average. Thus, history shows that our trade with India progressed in between 1996-97 and 2003-04. Various factors were responsible for the widening trade deficit of Nepal with India in recent years. The political instability and low morale of the business community of Nepal seem to have affected the overall trade sector in the recent past. However, history shows that Nepal had improved its trade with India after revisiting the trade treaty. Thus, we are reviewing the trade treaty to adopt some corrective measures that can narrow down country's trade deficit with India and further promote bilateral trade between the two countries.

Different transit hassles that traders face while shipping Nepal-bound cargo are said to have not only increased trading cost but also affected overall trade between Nepal and India. How do you plan to address these issues?.

Studies have shown that it takes 42 days for a Nepali product to reach the export destination due to various factors including limited access to sea. Similarly, any third-country product takes almost 35 days to reach Nepal from the supplier's destination. This clearly shows that transactional cost of trade in Nepal (both export and import) is high. Similarly, an independent study has shown that per container shipping cost to and from Nepal is almost $2,700 while per container shipping cost in Sri Lanka is almost $900 and that in India and Bangladesh is nearly $1,700. This shows that transit cost in Nepal is comparatively higher due to multiple factors. As a result, Nepali goods and the entire trade sector are failing to compete in the global market. Now, the major responsibility of the government is to cut down the trading cost and also reduce the number of days in trading goods to and from Nepal. Both of these things can be addressed through transit treaty and RSA. Meanwhile, a few measures have been initiated by both Nepal and India to address such issues. Until recently, we had only one gateway port. As the Visakhapatnam (Vizag) port has come into operation, it has provided an option to traders who had been transporting goods only through Kolkata port. Similarly, both the governments are committed to enhance the road and railway services, especially along the border areas, to ease trade. More importantly, construction of integrated check posts (ICPs) will facilitate trade between the two countries. While the Indian government has already handed over the ICP at Birgunj to Nepal, we have urged Indian authorities to complete the construction of ICP in Biratnagar within this year. Likewise, we have also requested Indian government to start the construction of ICP in Bhairahawa and Nepalgunj soon. The government has also expedited the process to upgrade trade roads from the border areas to different industrial corridors in the country. Plans are also afoot to provide bulk-cargo facility in Biratnagar, Bhairahawa and Nepalgunj. All these factors will be crucial to reduce the trading cost to and from Nepal. Importantly, we are preparing to incorporate the inland waterways agreement that Nepal had signed with India recently. In the IGC meeting this time, we have also raised the trilateral transit agreement between Nepal, India and Bangladesh to ease the movement of goods between the three nations not only through roadways, but even through railways and waterways. The Indian government is positive towards this agenda raised by Nepal. Moreover, the Indian government has sought a concept note on this matter from Nepal.

Though the upgradation of Rohanpur-Singhabad railway line was planned in 2009 there has been no progress made so far. Why is it so?

In this regard, India has already constructed broad-gauge railway tracks but Bangladesh is yet to complete the works on their side. However, Bangladesh has recently notified us that they have completed almost all the works on their side too. Regarding this, Nepal and Bangladesh will have a commerce-secretary level meeting within the next one month. This issue will be tabled in the meeting with high priority. Similarly, we will also raise the issuing regarding trilateral transit arrangements during the meeting with the Bangladesh government.

Nepal had proposed a trilateral transshipment agreement among Nepal, India and Bangladesh a long time back. Why has this proposal not gathered momentum?

During the previous IGC meetings the Indian government had asked Nepal to prepare a document regarding the trilateral transshipment agreement and present it to the Indian government. Unfortunately, we have not prepared any document relating to it so far. This time we will prepare a concept note and deliver it to the Indian government. The Indian government has assured us to hold further discussions on this issue after receiving the concept note.