“The two sides have already put initials and the Indian commerce minister will soon visit Nepal to sign it. So, there is no question of any reversal,” Purushottam Ojha, Commerce Secretary, told myrepublica.com. [break]
- No non-tariff barriers, additional duties on Nepali goods
- Agro-exports to be allowed through local standard certification
- Trade via air to be opened
- Five new trade routes to be opened
- Treaty to be renewed in seven years
The revised treaty mainly widens the facilities for Nepal and addresses non-tariff barriers, additional duty and standards related hurdles that Nepali exports suffered from over the last five years.
Once signed and made effective, the new treaty will categorically bind India not to impose extra-customs duty, state tax and non-tariff barriers on Nepali goods for next seven years. This provision will pledge to Nepal´s non-tariff preferences over other countries -- something which could help Nepali goods regain an edge in the Indian market.
Imposition of non-tariff and extra-customs duties, which eroded Nepal´s competitiveness and hurt policy predictability, was badly affecting Nepal on exports front. Sharp rise in consumption, on the other hand, has caused its trade deficit to widen to more than Rs 108 billion.
With longer duration and inclusion of categorical provisions against non-tariff and para-tariff barriers, entrepreneurs are hopeful of the new treaty laying down a more predictable trading environment.
The treaty even provisions that India will waive off special additional duty (SAD) and other duties, if those are in place now, on request of Nepali government. SAD and other additional duties are one of the obstacles that lowered Nepal´s competitiveness and caused exports to spiral down. Presently, readymade garment and about a hundred other Nepali exports are subjected to SAD.
Another major provision, which will mainly relieve agro-exporters, is that the new treaty will bind India to recognize Nepal´s standard certification. It also puts the responsibility of upgrading Nepal´s laboratory and ensuring standard accreditation on India´s shoulder.
Once that happens, exporters of Nepali tea, cardamom, ginger and other agricultural produces will no longer need to produce quality certification from Indian laboratories in Kolkata or Patna for entering their produces to India. This will prevent traders from losses, which they incur while waiting for certification for nearly a week, and thus will boost the export of primary goods.
The treaty will also annul the system of exporting vegetable ghee through a channeling agency. It will enable traders dealing on Indian currency to enjoy excise and all other facilities as enjoyed by traders dealing on convertible currency.
The new treaty will open bilateral trade via air route as well. Tribhuvan International Airport will be used as the official port for exports and airports in New Delhi, Mumbai, Kolkata, Bangalore and Chennai will be ports for imports.
It will also add four new land routes -- Maheshpur (Nawalparasi), Sikta (Parsa), Gulariya (Bardiya) and Laukaha (Siraha) -- for bilateral trade. The treaty provisions a mechanism, including local customs, government and chamber´s officials, to instantly address trade related problems.
milan@myrepublica.com
Related story
Experts discuss historic Nepal-Britain 1923 Treaty
