Commerce Minister Rajendra Mahato and his Indian counterpart Anand Sharma signed the treaty amid a function in the capital. This brought the enforcement of the new treaty and agreement with immediate effect, enabling the traders to enjoy the new benefits such as elimination of non-tariff barriers and other facilities now. [break]
"The treaty comprises provisions that Nepal long sought in order to address problems it faced in exports to India. Hence, we believe it will give new impetus to country´s exports to India," Mahato said, after signing the treaty.
The new treaty, among others, has provisioned elimination of non-tariff barriers, certification related problems and extra-customs duty -- three major factors that together hurt Nepali exports and discouraged exporters in the past.
These problems together had effectively rendered the zero tariff facility of the treaty defunct in case of major exports, debilitating Nepal´s competitiveness, thereby, badly affecting Nepal on the exports front.
Sharp rise in consumption, on the other hand, has caused its trade deficit to widen, which crossed well over Rs 108 billion in 2008/09.
"Hence, the most important aspect of the treaty is that it has laid down very predictable trading environment. It can spur trade and enable Nepal attract more investment and technology from India and other countries as well," said Arun Chaudhary, president of Nepal-India Chambers of Commerce and Industry (NICCI).
The treaty also binds India to recognize Nepal´s standard certification. It also puts the responsibility of upgrading Nepal´s laboratory on India´s shoulder, a provision which officials said will ensure enforcement of standard accreditation provision. Once that happens, exporters of Nepali tea, cardamom, ginger and other agricultural produces will not need to produce quality certification from Indian laboratories in Kolkata or Patna for entering their produces to India. This will prevent traders from losses they incurred while waiting for a week for certification to come, and thus will boost the export of primary goods.
The new treaty, which will be valid for next seven years, has enabled traders dealing on Indian currency to enjoy excise and all other facilities as enjoyed by traders dealing on convertible currency. It has annulled duty-refund procedure.
The new treaty has for the first time open bilateral trade via air route. For the purpose, Tribhuvan International Airport (TIA) will be used as the official port for exports and airports in Delhi, Mumbai, Kolkata, Bangalore and Chennai will be ports for imports. It has also added four new land routes, namely, Maheshpur/Thutibari (Nawalparasi), Sikta-Bhiswabazar (Parsa) Gulariya-Murtiya (Bardiya) and Laukahi-Thadi (Siraha), for bilateral trade.
The treaty also provisions setting up a new mechanism including local customs, government and chamber´s officials to instantly address trade related problems.
During the bilateral talks that the two ministers held earlier on the day, the two agreed to soon finalize modality for enabling Nepal utilize Vishakhapatnam as alternate port for third country trade.
"India will also take steps to smoothen movement of cargoes along the Fulbari-Banglabandh route, as requested by Nepal. Steps are already underway for upgrading the customs facilities along the Indo-Bangladesh border. Once done, it will end problems Nepal faced so far in utilizing this transit route," said Indian Commerce Minister Sharma.
India firm on CVD on garment export
Despite expressing good gestures and promises of all possible support, Indian Commerce Minister on Tuesday indicated that Nepal´s readymade garment could continue to face countervailing duty (CVD) of 4 percent.
The CVD that India imposed a couple of months ago has brought exports of popular brands like John Players, Peter England and DJ & G to a grinding halt. Nepali exporters argue that the imposition of duty on a product, on which India has no excise duty, was against the spirit of ´National Treatment´ provisioned for Nepali exports.
"Worse still, India has been imposing duty on maximum retail price (MRP), self-assessing the export value as 60 percent of MRP tagged on the product. This is unfair and should be eliminated," said Prashant Pokharel, president of Garment Association Nepal.
However, Indian Minister Anand Sharma remarked that CVD was not a customs duty, and hence, its imposition was not against the treaty. He even defended the system of imposing duty on MRP. "It is being imposed on just 60 percent of the MRP value. It is not an unfair deal," he said.
Unfolding of such difference in interpretation unfolded on the very first day of the new treaty, meanwhile, has straightaway raised question over true implementation of the new promises by India.
"Differences in opinion rendered the treaty unfruitful over the last eight years. Latest stance of India on garment exports suggests this problem might continue in days ahead as well," said an expert, present at the signing ceremony.
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