Nepal, India set to amend bilateral trade treaty after 14 years, addressing trade imbalance

KATHMANDU: In a significant development, Nepal and India have agreed to revisit their bilateral trade treaty, which has remained unchanged for the past 14 years. The decision was reached during the recent meeting of the Nepal-India Inter-Governmental Sub-Committee (IGSC) on Trade, Transit, and Cooperation held on January 12 and 13.

Criticism has been directed at the government for the automatic renewal of the trade treaty without any revisions for the past 14 years. The Ministry of Industry, Commerce and Supplies (MoICS) has confirmed that both countries will engage in talks soon to address and amend the existing trade treaty.

Nepal’s push for amendments stems from the ballooning trade deficit with its southern neighbor. Out of Nepal’s staggering trade deficit of Rs 597 billion in the first five months of the current fiscal year, Rs 352.76 billion is attributed to the trade deficit with India.

The MoICS disclosed that Nepal and India will engage in a fourth round of talks at the technical committee level to discuss potential amendments to the trade treaty. Additionally, the two nations have agreed to revisit the transit treaty, with discussions focusing on cargo truck movement through key entry points and addressing trade hurdles along specific routes.

The bilateral trade framework is grounded in the India-Nepal Treaty of Trade and Agreement of Co-operation to Control Unauthorized Trade, signed on October 27, 2009. The revised trade treaty, initially valid for seven years, was automatically renewed in October 2016 without any amendments, leading to criticism from trade experts and the business community.

During the recent IGSC meeting, the countries also explored mutual market access for medicinal and ayurvedic goods. The Indian delegation emphasized the significance of the Paris Convention to promote foreign direct investment.

The meeting underscored the importance of strengthening unobstructed trans-national connectivity, including discussions on the establishment of an integrated customs point and the construction of a railway service between Nepal and India.

The joint-secretary level meeting, the first in three years, covered various agendas and marked an essential step towards addressing trade-related issues between the two nations.

Fiscal Nepal |
Tuesday January 16, 2024, 10:22:28 AM |

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