The Indian government has simplified its rail freight corridor access for Biratnagar and Bhairahawa, giving Nepali exporters and importers an opportunity to reduce freight transportation charges and improve the trade timeline. Nepal will now be able to transport all types of bulk goods over the rail link of Jogbani and Biratnagar, and they will also get similar access over the Nautanwa and Sunauli route for transporting goods from Bhairahawa. The new understanding is significant for Nepal, as earlier it was allowed only to transport limited types of bulk goods by Biratnagar, which may sometimes compel businessmen to go for longer routes as well as longer transportation lengths. With the new agreement in place, Nepali businessmen importing or exporting goods through India can gain faster and less costly transportation facilities from both the ports of Kolkata and Visakhapatnam. The transportation system in Nepal is always accompanied by complex layers that have increased transportation costs severalfold. The seaports are distant, and land transportation within India is longer. Nepali exporters and importers have been forced to use trucks to ferry goods to railway stations situated far from Bhairahawa, Biratnagar, Birgunj and other cities. The transportation of goods through roads is still slow, costly, and full of uncertainties at border control posts. Trains will reduce fuel costs, damages, and the process of continual reloading. Nepal’s businessmen will now have a route through India’s wide rail networks to Biratnagar and Bhairahawa.
Cooperation for trade
To benefit from this initiative, Nepal’s exporters need to be ready well in advance. As exports and imports of a high bulk of goods will help reduce freight rates, they must be ready to increase the volume of goods to be transported. Obstacles related to capacity, availability of material, and processing of paperwork have been a pain for Nepali exporters. Planning and attention to detail on the part of both factories and rail companies are required to make optimal use of the more affordable train routes for Nepali goods. Meanwhile, the Nepali side requires improved logistics, which can be gained by improving the status of dry ports in Biratnagar and Bhairahawa. Increasing storage capacity and improving the handling of containers are essential. Customs clearance must be speedy because it will help build confidence among businesspeople because they are more concerned about their goods being held up at ports. Equally essential are the clarity on the schedule of the freight trains and regular communication with the India side.
The reduction in transportation cost will offer an opportunity to promote goods that are already in demand in other parts of South Asia and elsewhere. But to convert this into an actual export boom, there is a need for collaboration on improving quality and certification assistance. Given the fact that many exporters are still struggling with Indian standards, Nepal should push more for faster certification by India. In Nepal’s case, as it is experiencing an increasing trade deficit, any measure of reduced transportation cost is valuable. After India agreed to easy access to rail freight, it might have appeared small, but this has indeed given Nepal the opportunity to secure more routes and allow Nepal’s exporters to gain a competitive advantage by cutting ferrying costs. To seize this opportunity for achieving larger benefits in due course, Nepal needs to carry out diligent planning at home and reform its trade fundamentals.
