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Boost indigenous agri products to balance Nepal-India trade: Experts

Thursday, August 07, 2014 > 08:35:05

(My Republica)

Nepal imports eight times more goods from India than it exports to the country. In the eleven months of the last fiscal year, Nepal´s imports from India stood at Rs 434 billion against exports worth Rs 54 billion.

Given the huge trade gap, everyone in Nepal is of the view that the country should focus on increasing production to export more and work toward trade facilitation with India.

"Boosting indigenous agricultural production is much important in our case as the country imports agricultural products worth over Rs 100 billion," said Hem Raj Regmi, a senior statistician at the Ministry of Agricultural Development.

Peoples´ eating habit is changing as they prefer fine Indian rice to coarse Nepali rice. As a result, Nepal has been importing rice worth about Rs 1 billion from India per month. Likewise, import of goat for meat and milch buffaloes has also risen significantly over the past few years.

The decline in agricultural production is often attributed to the shortage of farm hands as more youths have been leaving the country for foreign employment.

Officials at the Ministry of Commerce and Supplies (MoCS) say that reducing agricultural imports by increasing production at home is the first thing that Nepal needs to do and then comes trade facilitation when we produce enough to export as well.

"The trade treaty of 2009 allowed Nepal to export some 16 products to India in duty free and quota free basis but still the trade deficit situation has rather been increasing every year," said a MoCS official seeking anonymity.

In the agreement of Nepal-India Joint Commission inked last Saturday, the Indian government has agreed to further relax rules of origin requirements, simplifying and streamlining transit and customs related procedures and eliminating technical barrier on trade.

Talking to Republica, Deepak Subedi, deputy spokesperson of MoCS, said that Nepal has lobbied with India to recognize Nepal´s certification of Nepali agricultural and industrial products.

Subedi said Nepal has proposed with India to set up separate labs for certification at Raxaul and Gorakhapur for testing Nepali vegetables and perishable goods before exporting them.

Officials said Indian customs officials allow Nepali vegetables in the Indian market only when there is a shortage of vegetables there, but at other times, Indian officials demand lab test reports and certification, forcing Nepali exporters to visit Kolkata for such tests. India sees vegetable shortage especially during June and July.

During bilateral talks with India, Nepal has also been demanding that Nepali number plate vehicles should be allowed in India for 72 hours as a reciprocal measure. Also, Nepal wants faster delivery of cargo from Kolkata to Birgunj through improvement of the Kolkata-Birgunj railway line.

The idea of exporting hydropower to make up for trade deficit has been rebuffed by experts, but experts agree that enough hydropower generation can substitute for fuel imports, thereby contributing significantly to reducing trade deficit. And if Nepal is able to overcome the energy shortage through hydropower development, the industrialization process could move ahead significantly, making Nepali products competitive in the international market. In 2013, Nepal imported fuel worth Rs 49 billion from India.

Senior Vice-President of the Federation of Nepalese Chambers of Commerce and Industry Pashupati Murarka is hopeful of positive outcomes from the recent high-level bilateral visits and said Nepal´s energy crisis will ease after India starts supplying electricity through the two proposed cross-border transmission lines. The recent JC meeting had agreed to expedite the construction of 132 kV Kataiya Kusaha and 132 kV Raxaul-Parwanipur Transmission line projects.

In recent years Nepali factories are seeing up to 60 percent of under utilization of their capacities due to energy shortage. Also, the contribution of the industrial sector to the GDP has declined to 6 percent from around 10 percent over a decade ago.

Murarka said the upcoming visit by Indian Prime Minister Narendra Modi will foster positive perceptions at people to people level, boost the confidence of Indian investors and change Nepal´s economic scenario.

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