Embassy of India, Kathmandu, Nepal

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About Trade and Commerce

About Trade and Commerce

Commercial and Economic Relations:

 

India is Nepal's largest trade partner and the largest source of foreign investments, besides providing transit for almost entire third country trade of Nepal.  India accounts for over two-third of Nepal’s merchandise trade, about one-third of trade in services, 36% of foreign direct investments, almost 100% of petroleum supplies, and a significant share of inward remittances on account of pensioners and workers.

 

Merchandise Trade

 

The trends in India-Nepal merchandise trade over the past few years (Nepalese fiscal year: July 16-July15) are as under.

 

In IRs crores

 

Nepal’s:

Year

Growth in %

 

 

2014-15

2015-16

2016-17

2014-15

2015-16

  2016-17

Total Export

5332.4

4382.3

4565.5

-5.5

-17.8

4.2

Export to India

3491.5

2468.3

2590.5

-5.9

-29.3

5.0

Total Import

48417.7

48349.9

61882.0

9.3

-0.1

28.0

Import from India

30728.4

29825.7

39604.3

4

-2.9

32.8

Total Trade

53750.1

52732.2

66447.6

7.9

-1.8

26.0

Total trade with India

34220

32294.1

42194.9

2.8

-5.6

30.7

Total Trade Balance

-43085.3

-43967.6

-57316..5

11.4

2

30.4

Trade Balance with India

-27236.9

-27357.4

37013.7

5.4

0.4

35.3

 

In US$ million

 

 

Nepal’s:

Year

 

Growth in %

 

2014-15

2015-16

2016-17

2014-15

2015-16

2016-17

Total Export

838.5

659.3

687.7

-8.7

-21.3

4.2

Export to India

549

371.3

390.2

-9.2

-32.3

5.0

Total Import

7613.6

7274

9322.2

5.4

-4.4

28.0

Import from India

4831.9

4487.1

5922.1

0.3

-7.1

32.8

Total Trade

8452.1

7933.3

10010.0

3.8

-6.1

26.0

Total trade with India

5381.0

4858.3

6356.4

-0.6

-9.7

30.7

Total Trade Balance

6775

6614.7

-8634.4

7.5

-2.3

30.4

Trade Balance with India

4282.9

4115.8

-5575.9

1.7

-3.9

35.3

 

 

 

(in % age)

India’s share: in Nepal’s

01-02

03-04

05-06

07-08

09-10

11-12

13-14

14-15

15-16

16-17

Export

59.6

57.1

67.6

65.1

65.8

66.8

65.8

65.5

56.3

56.7

Import

41.1

57.8

61.7

64.2

58

64.8

66.7

63.5

61.7

64.0

Total trade

46.7

57.6

63.2

64.3

59.1

65.1

66.6

63.7

61.2

63.5

Trade Balance

26.7

58.2

58.5

63.8

56.5

64.5

66.8

63.2

62.2

64.6

 

 

During the early 1970s, India absorbed almost all of Nepal’s exports and accounted for nearly 90% of Nepal’s imports. A conscious Nepalese policy of trade diversification saw India’s share in Nepal’s foreign trade drop below 30% by mid-1990s.  The 1996 trade treaty, combined with India’s rapid economic growth and industrial transformation in the 1990s as also monetary integration through the fixed exchange rate (INR 1= NRS 1.6) since 1993, has helped reverse the trend.

 

Nepal’s transit trade is routed through twenty two designated routes from India-Nepal border to the port of Kolkata/Haldia. In addition, Nepal’s trade with and through Bangladesh also transits through India. Government of India is providing assistance for development of cross-border trade related infrastructure. It includes upgradation of four major custom checkpoints at Birgunj-Raxaul, Biratnagar-Jogbani, Bhairahawa-Sunauli and Nepalgunj-Rupediya to international standards; upgrading approach highways to the border on the Indian side; upgrading and expanding the road network in the Terai region of Nepal; and, broad gauging and extending rail links to Nepal.

 

LoE on Operationalisation of Vishakhapatnam Port (Amendment in the Treaty of Transit) for traffic-in-transit between Vishakhapatnam Port and Nepal signed in February 2016 during the visit of Prime Minister of Nepal to India. It will Facilitates movement of transit traffic between Vishakapatnam Port to Nepal (ICD Birgunj) and provide additional transit facilities. LoE was signed in February 2016 during the visit of Prime Minister of Nepal to India for operationalisation of traffic-in-transit through rail transport to and from Vishakpatnam port (Amendment to Rail Service Agreement).  It will provide additional transit facilities through the port of Vishakapatnam.

 

The previous trade treaty revised in 1996 can be considered as a turning point in the trade relations between the two countries. Since 1996, Nepal’s exports to India have grown more than eleven times and bilateral trade more than seven times; the bilateral trade that was 29.8% of total external trade of Nepal in year 1995-96 has reached 63.2% in 2016-17.

 

Bilateral trade

 

 

 

 

 

 

 

 

 

Bilateral Framework

 

The bilateral framework for trade is provided by the India-Nepal Treaty of Trade and Agreement of Co-operation to Control Unauthorised Trade - 2009. A new Trade Treaty, valid for seven years was signed on October 27, 2009 after successful conclusion of bilateral consultations, which began in August 2006. Both treaties were renewed  for a further period of 7 years in October 2016.   

 

The main features of the previous Trade Treaty retained in the 2009 Treaty are as follows: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade & Commerce