NEW DELHI : Despite several challenges plaguing the bilateral relationship of late, India and Nepal are all set to upgrade their bilateral trade and transit ties under which Kathmandu will be given access to some of the key Indian ports along with enhanced reach for its agriculture produce,
Under its ‘Neighbourhood First’ policy the Narendra Modi government has decided that it will now allow Nepal to export and import goods from two of India’s strategic ports — Mundra Port in Gujarat and Dhamra Port in Odisha — under the yet to be revised transit treaty, negotiations for which are going on, diplomatic sources told.
Currently, Nepal is allowed to use only the ports of Kolkata and Visakhapatnam.
Such a move, according to sources, will not only give Nepal enhanced entry into the Indian markets but will also enable Kathmandu to use India as a gateway to access other markets in Southeast and Central Asian regions, said a source, who wished to not be identified.
This has been a long-pending demand by Nepal, which had been pushing India for such an upgradation in both the trade as well transit treaties that were signed decades ago.
The agreement was initially finalised as ‘The Treaty of Trade and Transit’ that was signed between the friendly neighbours in September, 1960. Thereafter, in 1978, the treaty was split into two — trade and transit.
Both these treaties get automatically renewed every seven years. The last time these two treaties were reviewed was in October 2016, without any changes.
The trade treaty allows Nepal unilateral duty-free access to the Indian market even as India remains Nepal’s largest trading partner. However, Nepal continues to complain that it has not been able to penetrate the Indian markets for its good due to various non-tariff barriers.
Since 2016, Nepal has been pushing India to make “significant” changes to the treaty even as it continues to bat for upgrading the 1950 treaty of peace and friendship that address all issues under the entire gamut of bilateral ties between New Delhi and Kathmandu, including upgradation of the trade and transit agreements.
In 2020, during the India-Nepal Inter-Governmental Committee (IGC) meeting — the highest bilateral mechanism for promotion of trade and investments between both countries — it was decided that the bilateral transit treaty will be amended.
At that time, it was also decided that the Government-owned cargo railway services will be opened to private operators too and using Nepal railway for trade purposes will be allowed.
