KATHMANDU: Nepal and India today signed Treaty of Trade and Agreement of Cooperation to Control Unauthorised Trade here. Minister for Commerce and Supplies Rajendra Mahato and Indian Minister for Commerce and Industries Anand Sharma signed the treaty that will come into effect immediately.

New trade treaty is the revision of 1991 treaty. It addresses changes that took place in bilateral, regional and international trade in the last 18 years, said Mahato. “The new treaty will help Nepal reduce trade deficit with India,” he said, “It will be a milestone for Nepali exports if Nepal can produce quality goods at competitive prices,” he added.

Two-third of Nepali trade is with India and the trade volume has been growing. Since 1996, Nepali export to India has grown 13 times but import from India has dominated the trade. The new treaty has removed non-tariff barriers and made trade more transparent. It has made a provision for simplification of trade and transport related documents. It makes rules of origin, duty refund procedure and tariff rate quota in favour of both the countries.

Indian minister Anand Sharma hopes that both Nepal and India will benefit from the treaty. “It will reduce hurdles in trade between the two countries and create better environment,” he said. There will be no restriction on the quantity of export of Nepali products to India hereafter, he added.

He said the treaty had room for improvement and simplification of trade and commerce between the two countries. “India wants to see prosperous neighbours and the treaty is a step to ensure peace and prosperity in Nepal,” he said.

The revision of agreement of cooperation to control unauthorised trade allows re-export of goods manufactured and produced in one contracting party to third countries through the territory of another contracting party without any manufacturing activity.