Nepal is hosting commerce secretary level meeting with India later this month to discuss country´s widening trade gap, particularly its faltering exports to the southern neighbor, which has led to alarming rise in trade deficit.

The meeting will be held for two days starting January 27, said a senior official at the Ministry of Commerce and Supplies (MoCS). During the meeting, Nepal will push India to revoke countervailing duty and other extra-customs duty imposed on major Nepali exports. Owing to such duties, Nepal´s export to India declined to Rs 12 billion in the first four months of 2009/10 from Rs 15 billion recorded in the same period last year. The Nepali side will also ask India to step up standard accreditation process, remove all non-tariff barriers, operationalize new transit facilities and fulfill other trade facilitation commitments made in the new bilateral trade treaty. “The meeting will focus on removing existing trade impediments and implementing new treaty provisions that will give boost to Nepali exports,” said the source. The ministry has taken 4 percent additional customs duty on Nepal´s key exports, charging duty on maximum retail price instead of ex-factory rate on readymade garment and lengthy standard certification process for perishable agro-products as major deterrents to Nepali exports. If these impediments are removed, it anticipates, the export to immediately catch upward trend. As the new treaty has a provision of India exempting Nepal from all extra-customs duty, officials are optimistic of India responding positively, especially given the pressure that the existing trade imbalance is having on its economy. The ministry will also ask India to open Nepal´s readymade garment exports to India, which has come to a standstill due to imposition of countervailing duty on value based on maximum retail price, instead of ex-factory production price. It had already made a request to this connection after Commerce Ministers from two countries signed the treaty, but India has yet to respond to it. Apart from this, Nepal is also requesting India to gear up the process of lab upgradation and standard accreditation — something which will free Nepali exports from tedious quality certification process that they are facing now in India.

As India is also the transit providing country for Nepal, the commerce secretaries from the two countries would also discuss the ways to ease movement and operations of third country cargoes in transit. “We will moot amendment in transit treaty and immediate operation of new transit port — Vishakhapatnam — and Rohalpur-Singhbad transit railway line,” said the source. Once the Vishakhapatnam port comes into operation, Nepal believes its cost of third country trade will drop. Operation of Rohalpur-Singhbad railway line too will enable railway cargo from Birgunj ICD to directly enter Bangladesh, the second largest trading partner in South Asia, under one-lock system. The ministry will also discuss on easing operations along the road transit of Kakarbhitta-Fulbari-Banglabandh to give boost to country´s trade with Bangladesh.