The breakthrough on the long-standing trade issue came on Tuesday, when the two-day Inter-governmental Committee (IGC) meeting of Commerce Secretaries of the two countries concluded in New Delhi. [break]
India had imposed an additional customs duty to 331 Nepali exportable items in 2006. Although it waived off the duty on 169 items in 2008, it continued such a duty on 162 items till date. Nepali business people hailed the removal of 4 percent additional customs duty, saying that it would increase competitive strength of those products in the Indian market.
"Exporters of products like metal products, steel, iron alloy, copper sheet, yarn, textile and cotton will benefit from the new agreement," Shankar Pandey, member of FNCCI overseeing Nepal-India trade, told Republica on Tuesday.
Records of Trade and Export Promotion Center (TEPC) show iron and steel items are Nepal´s largest export to India. Their export was valued at Rs 2.7 billion during the first quarter of 2011/12. Similarly, export of yarn products - the third largest export item to India from Nepal - was valued at Rs 1.63 billion during the period.
The Indian side even issued a notification of waiver on December 5, but it will come into effect from March 2012 only.
Pandey further said that India agreeing to end the Duty Refund Procedure (DRP) - a process of refunding the excise duty levied in India on Nepal-bound products - and allowing Nepal to collect excise duty at customs points will simplify imports.
Nepal had requested for end of DRP mainly because the refund was proving to be a tedious task. Owing to impractical DRP provision, India´s outstanding dues to Nepal have been piling up for years. In return, Nepal has assured India of eliminating the 5-percent Agriculture Reform Fee (ARF) that it has been imposing on import of Indian agricultural products by 2013.
On Nepal´s demand, India also agreed to hold a meeting to review the Railway Service Agreement (RSA). The review meeting will be held in Kathmandu on January 23-24, said Nepali Commerce Secretary Purushottam Ojha.
Nepal has been pushing for the revision of RSA mainly to pave the way for linking cargo train services between Birgunj dry port and Bangladesh via Rohanpur-Shinghabad route, and Visakhapatnum port in India. Secretary Ohja told reporters that both sides are positive to operationalize Rohanpur-Shinghabad railway line and Visakhapatnam ports at the earliest.
He said that the issue of constructing the 42-km Amlekhgunj-Raxaul petroleum pipeline, however, could not be settled during the talks. "The project is still being examined. We need to find money to move this project," said Indian commerce secretary Rahul Khullar, adding, "It will take time."
Related story
India to settle DRP dues by March 2013
