The recent Nepal-India Joint Business Forum (JBF) meeting highlighted the need to enhance bilateral trade, remove trade barriers, and boost economic cooperation between the two closest neighbors - Nepal and India. Delegates representing the Nepali side, urged their Indian counterparts to help Nepali goods penetrate larger markets across the border and asked for fair and concessional treatment of Nepali goods. A bit of generosity from one of the world's fastest growing economies can open larger markets just across down south. The demand from the Nepali side appears justifiable since Nepal heavily relies on Indian markets to boost its exports and thus consolidate its economy.
Are financial markets none the wiser?
The trade relation can be gauged by the volume of transactions taking place between two nations. As per the data of the Fiscal Year 2022–2023, the trade volume between Nepal and India was over NRS 1,134.53 billion. This included imports from India of NRS 1,027.84 billion and exports to India of a mere NRS 106.69 billion, which is barely one-eleventh of the total bilateral trade. This shows that Nepal, with its smaller economy, is heavily reliant on Indian goods and services while making exports of several items to India, which frequently faces hurdles. Yes, Nepal faces several obstacles in accessing the Indian markets for its goods, such as ready-made garments, carpets, tea, coffee, handicrafts, jewelry, leather products, ginger, cardamom, medicinal herbs, and processed food items (like noodles and biscuits), which is why the tiny neighbor frequently demands easing of its exports to India. Similarly, it feels oppressed by India-imposed non-tariff barriers, unwieldy certification requirements, and delays in transit continue to challenge Nepali exporters. The imbalance in trade remains a concern, with Nepal’s trade deficit with India, for example, reaching alarming levels — approximately Rs 921.16 billion in the fiscal year 2022/23.
While Nepal faces difficulties in accessing or expanding Indian markets for its goods, the Indian enterprises have quite a cakewalk in Nepal’s industrial, hydroelectricity, and herb sectors. Indian goods of all hues and stripes produced in India have a strong presence in Nepal, while the same cannot be said about the goods of Nepali origin. India’s recent declaration that it would not purchase goods and services produced in Nepal with Chinese investments has made the matter worse for Nepali industries. To overcome trade and export-related challenges, there is a strong call from both the government and business sectors that India should help accelerate the implementation of agreements and understanding reached in the Nepal-India IGC meeting held in Kathmandu recently. The trade and commerce between the two neighbors with deep-rooted social, economic, and cultural ties, holds immense opportunity for both sides if allowed to expand further. However, it demands continuous efforts to resolve hurdles posed by the Indian side. As Nepal and India share a vision of seamless connectivity and strengthened economic ties through increased trade and commerce in the days to come, the southern neighbor, being a larger partner and a rising economic power in the world, can play a vital role in stabilizing and fortifying Nepali economy. Of course, it should reciprocate with a larger heart to Nepal’s demands for an easy, hurdle-free access to expanded markets of the 5th largest economy in the world.
