Bilateral Economic Zones to be created to further Indo-Nepal trade

The India-Nepal Inter-Governmental Committee on Trade, Transit and Cooperation outlined modes to deepen bilateral engagement in infrastructure, trade and investment inflow

December 7, 2020

Cross-border Economic Zones are to be instituted to increase the volume of bilateral trade relations.

The Detailed Project Report by Konkan Railways on the Kathmandu-Raxaul railway line is underway.

India has extended support in strengthening roadways, railways, electrification, connectivity and water management.

Clearing of ambiguities in SAFTA is key to increasing the volume of bilateral investments.

The India-Nepal Inter-Governmental Committee on Trade, Transit and Cooperation convened to discuss the broadening of bilateral engagements in trade and infrastructure. The Committee also highlighted the potential of cross-border economic zones in increasing the volume of bilateral investments. Attendees from both sides noted that the current volume of trade remained unaffected by the COVID-19 pandemic. 

Bilateral engagement in the domain of infrastructure has manifested in multiple types of projects. In the past,  India has extended support towards Nepal in improving roadway and railway linkages, taking up electrification projects, enhancing water pipeline systems and promoting disaster resilience. The Kolhapur-Mahakali stretch of the East-West Highway has been the site for the construction of the twenty two bridges, and nineteen roads have been recommended to the Terai Region in Nepal by the Government of India. Additionally, the Konkan Railway Corporation has been authorised by the Government of Nepal to take on a Detailed Project Report to facilitate the construction of a railway line connecting the capital city of Kathmandu with Raxaul in Bihar. Given the proximity of the town to two key metropolitan cities : Delhi and Kolkata, Raxaul is a strategic link in the furthering of India-Nepal trade. Furthermore, the 2004-13 period saw India’s extending support towards the laying of a bilateral optical fiber line.  

The BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) initiative is one with greater scope of expansion for India’s bilateral trade with nations including Nepal, Bangladesh, Myanmar, Thailand, Bhutan and Sri Lanka. Experts opine that the relaxation of the Rules of Origin, clarification of the ambiguity in the South Asian Free Trade Agreement (SAFTA), implementation of Single Window clearance and Risk Management systems can contribute towards making the current trade procedure between India and Nepal seamless. With the upgradation of existing technology utilised in bilateral trade relations, and the successful overcoming of barriers to trade, both India and Nepal can look to significantly increase the scope of bilateral engagement.