KATHMANDU: The revised Nepal-India trade treaty will enable Nepal to boost export to India. According to Commerce and Supplies Minister Rajendra Mahato the revised trade treaty would solve most of the problems that Nepal has been facing since it was signed first in 1991.

“After 18 years, the revised trade treaty will minimise problems of Nepal in the bilateral trade and help expand trade relations with India,”

he said, adding that the treaty will have a seven-year shelf

life, two years more than the earlier treaty.

Indian Commerce and Industries Minister Anand Sharma will arrive here on Tuesday to ink the revised treaty. The two ministers will also sign a new agreement upgrading the 1996 agreement to control unauthorised trade from third countries. Both agreements were initialised during Prime Minister Madhav Kumar Nepal’s five-day visit to New Delhi in August.

“The treaty will help private sector enhance its professional capacity in matters of trade exchanging reliable information with trade partners,” said Mahato.

“Nepal had been facing problems in certifying its goods in India previously but the revised treaty will solve this problem, as the certification processes would be done in the laboratories of Nepal itself,” he said, adding that 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.

India will also facilitate export under the Most Favoured Nation treatment of articles manufactured in Nepal, which do not fulfil the criteria for preferential access and establish four additional Land Customs Stations 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.

According to Mahato, “The new trade treaty will also see bilateral trade being conducted in Indian rupees 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, with 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.

The two sides will also undertake measures to reduce/eliminate non-tariff, para-tariff and other barriers that impede promotion of bilateral trade.

India 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.

Benefits for Nepal

• The treaty will have a seven-year shelf life, two years more than the earlier treaty.

• Goods to be certified in laborataries in Nepal itself,

• India to establish four additional Land Customs Stations and open air traffic for bilateral trade

• Bilateral trade to be conducted in Indian rupees at par with trade in convertible currency in respect of tax rebates and other benefits available to such trade.