‘India’s trade barriers limit Nepal’s export potential’

- Post Report, Kathmandu

Mar 31, 2016-

Experts and traders have said tariff and non-tariff barriers imposed by India have restricted Nepal’s export potential.

India is Nepal’s largest export destination, accounting for nearly two-third of Nepal’s trade, and that such trade barriers affect Nepal severely.

India has been imposing counter veiling duty (CVD) on Nepali ready-made garments, copper and brass utensils and kattha. It has also imposed quantitative restrictions on vegetable ghee, copper utensil, and acrylic yarn.

“Nepali traders are forced to pay transit fees for exporting medicinal herbs in neighbouring Utter Pradesh state of India,” said Purushottam Ojha, former Commerce Secretary, adding India should provide tariff preferences on agriculture and primary goods on a reciprocal basis as per the bilateral trade treaty between two countries. “However, the imposition of non-tariff barriers (NTB) is high as far as Nepali products are concerned,” said Ojha, presenting a paper at a workshop on “NTB in Saarc region: Issues and Challenges” organised by the Confederation of Nepalese Industries (CNI) in Kathmandu on Wednesday.

India should, in fact, provide free access to Nepali goods not containing more than 70 percent imported raw materials. “However, India has been imposing 6-12 percent of the CVD on 30 percent of the maximum retail price of the branded Nepali ready-made garments,” he said.

Although Nepal has long been requesting India to waive the CVD, the southern neighbour has been reluctant to do so. Indian Ambassador to Nepal Ranjit Rae recently made it clear at an interaction in Kathmandu that the CVD would not be waived.

The need for quarantine and food safety tests is another factor impeding exports of agricultural products, including tea, ginger, big cardamom and green vegetables. “Although there have been calls for cooperation in standard harmonisation, but it is yet to be done,” said Ojha.

He said the bilateral trade agreement (Protocol-I.3) has mentioned the Indian government will assist Nepal in increasing its capacity to trade through improvement of technical standards, quarantine and testing facilities and related capacity development. “Similarly, the Protocol II.6 talks about granting recognition to sanitary and phyto-sanitary certificates based on the capabilities of the laboratories,” he said.

Rajan Sharma, president of Nepal Freight Forwarders’ Association, said Nepal has been facing many problems in transit procedures such as NTB. “Absence of the government’s clear guideline on which agencies will handle what procedures, reluctance of the government to assume its responsibilities and lack of coordination among transit-related agencies have been affecting the traders,” he said. 

Shishir Dhungana, director general at the Department of Customs, said issues related to accredited laboratories have been hitting both import and export. “Recently, the department itself took initiatives to set up laboratories at customs points to resolve these problems,” he said. 

The participants also raised concerns about consumers being compelled to pay high prices for goods due the NTBs. They criticised the lack of commitment from Saarc countries to eliminate the NTBs. 

Trade expert Prachanda Man Shrestha underscored the need for the sharing of views of consumers, traders and governments on the NTBs. “Talks should be held at government-, business- and consumer-level to identify the real problems of NTB among the countries of the region,” he said.

Published: 31-03-2016 08:30

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