Senior officials from Nepal and India met at Pokhara to review the 2009 Trade Treaty signed by both countries.

The two-day meeting is the second Nepal-India Joint Secretary-level meeting since 2009, where India will respond to Nepal’s proposal of updating the treaty submitted in the first meeting in August 2018.

As part of the meeting, Nepal and India discussed various of interest pertaining to trade, business and connectivity.

The Indian delegation was headed by Department of Commerce Joint Secretary (South Asia) Bhupinder Singh Bhalla, while the Nepali delegation is represented by Ministry of Industry, Commerce and Supplies Joint Secretary Ravi Shankar Saiju.

Request for Access to Additional Indian Ports

Nepal has requested Indian side to give it access to two additional Indian ports for shipment of its goods.

While the Himalayan nation already has access to Visakhapatnam and Kolkata ports, they have made proposal seeking access to Mundra Port of Gujarat and Dhamra Port of Odisha.

“Nepal has presented a proposal to have access to two additional ports, namely the Mundra port in Gujarat and Dhamara port in Odisha. The Indian side has given a positive reaction over the proposal but a concrete agreement is yet to be made,” said an official from Nepal’s Ministry of Industry, Commerce and Supplies.

Amendments to the India-Nepal Treaty 1990 was one of the key agendas of this Joint Secretary level meeting held in Pokhara.

Other Trade-related Matters Raised

Nepal also sought India’s help in reducing its rising trade deficit through free access of Nepali products in the Indian market.

“Nepal’s trade deficit, especially with India, is constantly widening while our products are finding it difficult in finding proper space in the Indian market. We plan to discuss in detail on how to address these issues through the bilateral trade treaty,” informed Ravi Shankar Saiju, joint secretary at MoICS.

During the two-day trade treaty review meeting, Nepal also raised about giving the Nepali side preference for export of agricultural products and integration of Nepali manufacturing units to its value chain.

Additionally, the Himalayan nation also sought India to review the preference erosion and reciprocity in import & export of agricultural goods and some manufacturing products listed in the treaty.

Despite the treaty’s zero-tariff export facility on different Nepali products, Indian authorities have been imposing various additional taxes on Nepali goods. The Nepali side will also bring this up for discussion at the two-day meeting.

The meeting discussed various options to address different non-tariff barriers in Nepal-India trade and enhancement of Nepal-India connectivity through railway, waterway and roadway.

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The decision comes after sugar from major trade partners India and Pakistan have flooded the market, making it difficult for the country’s sugar mills to clear stocks that are relatively costlier than imported sugar.

According to a MoICS official, Nepal Ministry of Industry, Commerce and Supplies (MoICS) has recently submitted a proposal to the Nepal Cabinet to ‘put a hold’ on sugar imports for a certain time until the country’s sugar stock has been completely cleared.

 “During our inspection, we found out that the local sugar mills are facing difficulty in clearing their stocks. Thus, we have recommended halting import of sugar for a certain period,” said the official

Similarly, a few weeks ago, MoICS Joint Secretary Nabaraj Dhakal along with the members of the study committee had also suggested that the government halt sugar imports and increase the import duty to create for the country’s sugar stock.

Following huge pressure from Nepal sugar mill operators, the government had taken this measure during March, by increasing the import duty to 30 percent from 15.

However, the government failed to bring about the expected scenario.

Sugar mill operators were persuading the government to raise import tax on sugar stating that they were not only facing difficulty in clearing sugar stocks but were also not able to make payments to sugar cane farmers. They claim that more than Rs 7 billion worth sugar is lying at their warehouses.

“The production cost of Nepali sugar is much higher compared to its production cost in India and other countries. Halting sugar import completely for some time will give relief to sugar mills and ensure that sugarcane farmers get their payment on time,” said Rajesh Kedia, General Secretary, NSMA.

Nepal Sugar Mills Association (NSMA) states that out of the 178,000 tons of sugar produced in Nepal last year only 60,000 tons have been sold so far.

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