Nepal´s trade talks with its largest trade partner has been pending since December 2011, when the last Inter-governmental Committee (IGC) -- commerce secretary level -- meeting was held in New Delhi, due to political instability and weak diplomatic efforts by its officials.
The next IGC meeting is set to be held in Kathmandu from December 21 to 23.As per the understanding between Nepal and India, both sides have to sit for trade negotiations at least once in every six months in alternative locations.
“We have sped up preparation as the Indian officials have expressed willingness to sit in the negotiations,” an official at the Ministry of Foreign Affairs said.
Due to prolonged political stability, Nepali officials faced difficulty in convincing the Indian officials to sit in the meeting.
According to officials, the meeting will be focused on taking necessary measures to resolve problems in bilateral trade.
“In the meeting, we will thoroughly study the implementation aspect of past agreements between besides making attempts to take new measures to facilitate bilateral trade,” the official said.
At the meeting, Nepal will propose India to make amendment to the existing transit treaty to facilitate exports of third country goods to overseas markets via Indian ports and transport of vehicles imported from third countries through containers.
Existing transit treaty allows imports of vehicles via India territory only by driving. Indian customs officials have been frequently restricting export of goods originating in third countries via its customs points referring to the transit treaty. This is affecting return of goods which are imported for temporary purpose such as trade fairs and for different projects. “
“We are also requesting India to open up additional trade routes to facilitate our international trade,” the official added.
Nepali officials are also requesting India to allow transportation of third county imports in bulk through open wagons. Currently, only hooded containers are permitted to supply overseas imports to Nepal via India ports.
In a bid to address the long-running complaints of Nepali traders on hassles in Kolkata ports while clearance goods, Nepali officials are also seeking procedural simplification in Nepal´s third-country trade.
During the talks, Nepali side will also seek settlement of outstanding dues to be received by Nepal government from Indian authorities under Duty Refund Procedure (DRP). Though India agreed to scrap the DRP in 2011 in line with the Nepal-India Trade Treaty signed in 2009, Nepal has yet to recover outstanding DRP dues.
Nepali traders had long been opposing the provision of DRP stating that it is a time-consuming process of claiming back the amount that Indian government charges on imports from India as central excise duty. Under the DRP system, the amount paid by Nepali importers as central excise duty to the Indian government used to be deducted from the import duty that they were required to pay to the Nepal government. The Nepal government later used to claim the deducted amount from India.
Similarly, abolition of 12 percent Countervailing Duty (CVD) on Nepal goods including readymade garments (RMG), mutual recognition of quality certification for exportable products issued by authorized agencies of both the governments, and abolition of Agriculture Reforms Fee (ARF) being levied by Nepal are also among the major agendas of the meeting.
Indian officials are also seeking removal of non-tariff barriers from Nepal government for Indian ayurvedic and pharmaceutical products and reduction of customs duty on imports of cement and clinker from India. The meeting is also expected to review the restriction on circulation of Indian bank notes of Rs 1,000 and Rs 500 denomination in Nepal and dispute resolution measures to settle outstanding dues to be recovered from companies of both the countries by their respective governments.
Improving trade facilities in border points, automatic renewal of existing bilateral Railway Service Agreement (RSA), operation of additional customs points along the border, and restoration of Margin of Preference -- a gap between customs duty for overseas imports and Indian goods - are the other issues being raised by Nepal in the meeting.
Nepal is also requesting Indian officials to allow imports of cows of improved breeds from India. The southern neighbor, which has been facing deficit of fresh milk and meat, doesn´t allow its traders to export livestock.