Nepal, India All Set to Ink Revised Trade Treaty

Nepal and India are scheduled to sign the revised trade treaty on Oct. 27.

"The signing-in ceremony of the revised trade treaty will take place on Oct. 27," Minister for Commerce Rajendra Mahato told the Post.

"The treaty will be enforced after the signing-in at the commerce ministerial level." The trade treaty will be signed between Nepali Commerce and Supplies Minister Mahato and his Indian counterpart Ananda Sharma on the sidelines ministerial-level meeting of fourth South Asian Free Trade Agreement (SAFTA) that is slated for Oct. 28.

Sharma is arriving on Oct. 27 to attend the SAFTA Ministerial level meeting.

The two countries had put initials on the treaty at the commerce secretary level during Prime Minister Madhav Kumar Nepal's India visit in August.

The revised treaty which is a result of two-year consultation between the two countries will provide Nepal with more facilities and solve non-tariff barriers, additional duty- and standards-related problems that Nepal has suffered over the years.

In the new treaty, India has agreed not to impose extra-customs duty and non-tariff barriers on Nepali goods. Non-tariff and extra-customs duties have badly affected Nepal's competitiveness in the Indian market.

As per the treaty, India will have to waive off special additional duty and other duties that are in place, on the request of the Nepal government. The non-tariff barrier has been a major hurdle for Nepal's export growth in Indian markets. As of now, India has slapped 4 percent counter veiling duty (CVD) to Nepali readymade garments.

The treaty that includes 14 new points will remain effective for the next seven years. Few of the highlights are establishment of five new trade points, repairing of old machines in India and scrapping of duty-refund procedures.

Five new trade routes that will be opened as per the new agreement include Shiktabazzar-Bhiktabazar, Mahespur-Thutabari, Laukaha-Thadi, Gulariya-Murtiya and Tribhuvan International Airport to Delhi, Kolkota, Mumbai and Chennai.

India, as per the treaty, also has to recognise the quality certification of Nepali labs after an upgrade. This will relieve Nepali agro-exporters as they don't have to produce quality certification from Indian labs to enter into the Indian market.

The treaty is expected to give a fillip to Nepal's export trade to its largest trading partner as it is of a longer time period and provides more predictable environment.