Nepal will ask India to remove the restrictive quotas it has imposed on four products for nearly two decades during the upcoming Nepal-India Trade Treaty talks scheduled to be held in Kathmandu in December.

The southern neighbour has slapped quotas on acrylic yarn, copper utensils, vegetable ghee and zinc oxide. Nepali traders are allowed to export 10,000 tonnes of copper and zinc oxide to India annually. The yearly quota for vegetable ghee is 100,000 tonnes.

Nepali and Indian officials will sit down for a comprehensive review of the Nepal-India Trade Treaty next month. The meeting had been slated for October, but it was deferred to December at India’s request. “The date is yet to be finalised,” said Rabi Shankar Sainju, spokesperson for the Ministry of Industry, Commerce and Supplies.

According to the ministry, the two countries will discuss rules of origin and increasing Indian investment in Nepal’s production sector besides the restrictive quota. The first meeting was held in August in New Delhi. “This time we will discuss the agenda outlined during the first meeting,” Sainju said.

Ministry officials said Nepal had been pressing India to remove the quotas citing its ballooning trade deficit with the southern neighbour. In 2017-18, Nepal’s trade deficit with India stood at Rs763.2 billion, up 28.9 percent from the previous year.

“Imposing export restrictions on these four items has no significance,” said ministry officials. The Nepal-India trade and transit agreement was reviewed in 1996, 2002 and 2009.

According to officials, Nepal will ask to lower the rules of origin limit to 25 percent from 30 percent. Rules of origin determine the country of origin of goods under which duty-free privileges are granted. If India agrees to relax rules of origin, Nepal will receive duty-free facility even on products that have 25 percent value addition, according to officials.

Nepal will also ask India to allow trading of agricultural products under non-reciprocity measures.

Nepal imposes a 5-8 percent agriculture reform fee on Indian farm products. “Indian farm products are heavily subsidised, and non-reciprocity measures will allow Nepal to impose tariffs on Indian farm products to protect Nepali agricultural products,” the source said.

Nepal will ask India to help address sanitary and phyto-sanitary measures and technical barriers to trade besides requesting it to increase investment in Nepal’s major exportable goods during the review meeting.