Bridging Indo-Nepal trade gap

PM Narendra Modi’s visit to neighbouring Nepal augmented bilateral cooperation in sectors such as trade, investment and connectivity. The visit is expected to greatly boost the Indo-Nepalese trade ties.

Talks of enhanced bilateral ties and a boost in trade and investment were at the crux of Prime Minister Narendra Modi’s visit to Nepal.

The Federation of Indian Chambers of Commerce and Industry (FICCI) is hoping that the visit would add momentum to the Indo-Nepalese trade and investment ties. "Indo-Nepal ties evoke a rich tapestry of relations framed by trade and investment, culture and robust peopleto-people contacts."

As part of the discussions, Nepal has asked India to increase foreign direct investment, relax non-trade measures and allow greater market access for its products to bridge widening trade deficit. According to a joint statement issued after the meet, measures to “address this deficit through increased Indian FDI, relaxation of non-tariff measures including SPS standards for agro products, support in product development, relaxation of Rules of Origin requirement for duty-free access of Nepalese products, and mutual recognition of standards, conformity assessment and accreditation” were discussed.

This visit makes Modi the first Indian Prime Minister to visit Nepal in 17 years. The core focus of the visit was on 4 Cs of cooperation, connectivity, culture, constitution.

India’s export to Nepal in the year 2013-14 aggregated at US$3.58 billion, whereas the imports were worth a mere US$526 million. This resulted in a trade deficit of about US$3 billion. To tackle this issue, the Nepalese side has requested India to remove the countervailing duty on its products including readymade garments, copper, brass utensils, Kattha and others.

Apart from that, they have also sought removal of "quantitative restrictions on the four Nepalese export products-vegetable fats, copper products, acrylic yarn and zinc oxide."

India has assured them to consider the requests. "The Indian side also reiterated that problem of trade deficit could be best bridged by development of hydropower in Nepal and export of surplus power to India," the statement said.