As part of the meeting, both the sides discussed ways to control movement of fake or banned currency notes, curb criminal activities, among others across the Indo-Nepal border areas.

The Indian side proposed nine different proposals pertaining to the control of human trafficking, illegal trading of animals, among others.

Meanwhile, Nepali officials have put forth 11 proposals covering issues related to the construction of makeshift bridge on the Mahakali River, curbing of illegal drug trade, ensuring collaboration at times of disasters and financing damage or other related infrastructure building projects across the border areas, among others.

Discussion on the construction of four makeshift bridges unilaterally on the Mahakali River was one of the key elements at the meeting.

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The Government of India said this in its Gazette notification on October 27, 2017, wherein, it announced the removal of GST on supply of its services to Nepal and Bhutan in case of payments made in the Indian currency.

Though GST is not applicable on export of goods and services, it was exempted only for the payments that involve convertible foreign currencies.

With this, the cost of service exports involving cargo handling, transportation and container freight station became costlier. This turned into a burden for Nepalis, who usually transact with the Indian service providers in the Indian currency.

Following this, the Government of Nepal and the country’s private sector sought GST exemption on Indian service exports to Nepal.

In response, in the last week of September 2017, the Indian Government announced GST removal on Indian services involving transit operations such as shipment, transportation, insurance, container freight station and cargo handling charges, among others for Nepal and Bhutan.

Transit and cargo handling are among the major service imports Nepali traders get from India.

Decision Positive for Nepalis

According to Hari Bhakta Sharma, President of the Confederation of Nepalese Industries (CNI), the removal of GST would save Rs 10 billion per year on service imports for Nepali traders.

Rabi Shanker Sainju, Joint Secretary at the Ministry of Commerce Nepal, opines that the decision makes it easier for Nepali and Bhutanese traders to transact in Indian currency, which is widely circulated in both the countries.

The recent amendments to GST rules on the recommendation of GST Council of India will boost service exports from India to Nepal, Sainju added.

It’s noteworthy that the Nepal Rastra Bank also encourages Nepalis to make payments in Indian currency.

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