India has agreed to revise the bilateral trade treaty with Nepal. The treaty remains unrevised for the past 14 years.
At a time when the government is being criticized for not taking initiatives for a review of the treaty, which was automatically renewed without any revision since November, a meeting of the Nepal-India Inter-Governmental Sub-Committee (IGSC) on Trade, Transit and Cooperation held last week, agreed for amendments to the treaty. Issuing a public statement, the Ministry of Industry, Commerce and Supplies (MoICS), confirmed that the two countries would be sitting for talks soon, targeting the amendment to the current trade treaty.
Nepal has been pushing for the amendment citing its ballooning trade deficit with the southern neighbor. Out of Nepal’s trade deficit of Rs 597 billion in the first five months of the current fiscal year, its trade deficit with India stands at a whopping Rs 352.76 billion.
According to the MoICS, Nepal and India have agreed to sit for a fourth round of talks of the technical committee soon. In addition, the two countries also consented to revisit the transit treaty at a meeting which will be aimed at holding discussions on the movement of cargo trucks through Biratnagar and Bhairahawa entry points. Likewise, the next bilateral meeting is also expected to hold discussion removing trade hurdles existing in the Kakarbhitta-Banglabandha route via the Fulbari trade route.
The bilateral framework for trade is anchored on the India-Nepal Treaty of Trade and Agreement of Co-operation to Control Unauthorized Trade. The revised trade treaty, valid for seven years, was signed on October 27, 2009. Both treaties were automatically renewed for a further period of 7 years in October 2016.
Although the treaty is supposed to be renewed with necessary changes every seven years, it was not amended last time as well. It drew criticism from the trade and commerce experts and business community at that time after the treaty was renewed without any amendment.
The IGSC meeting of the two countries was held on January 12 and 13. According to the MoICS, the two countries organized the joint-secretary level meeting after three years. Last time, citing the impacts of COVID-19, the IGSC meeting was held via video conference on December 3-4, 2020.
Apart from looking at reviewing the bilateral trade treaty, the meeting discussed various agendas while also exploring ways for finding a mutual market access for medicinal and ayurvedic goods. The Indian side highlighted the significance of the Paris Convention to promote foreign direct investment.
The meeting also stressed the need for strengthening unobstructed trans-national connectivity between Nepal and India including the establishment of an integrated customs point and the construction of a railway service between the two countries.
