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Nepal’s share in Indian imports from South Asia down

Publication Date : 25-08-2014


Nepal’s share in India’s imports from South Asian countries has declined massively over the last decade, while most of other countries increased their share.

The share dropped to 20 per cent in 2012-13 compared to 53 per cent in 2002-03, thanks to eroding competitiveness of Nepal’s exports sector, according to a Nepal Rastra Bank study.

On the other hand, Pakistan’s share in India’s imports from the region increased to 20 per cent from just 8 per cent a decade ago.

Sri Lanka’s share rose to 23 per cent from 17 per cent, and Bangladesh’s share doubled to 24 per cent from 12 per cent over the period. Bhutan’s share remained the same at 6 per cent.

Former commerce seretary Purushottam Ojha said India’s expansion of market access for other countries was a disadvantage for Nepal.

“At a time when India has opened its market to rest of the world, Nepal has been losing its competitiveness in terms of both quantity and quality,” he said.

India had provided unique duty-free facility to all exports from Nepal, barring a few alcohol and other products, but such facilities were liberalised later.

The study team consulted 120 people, including exporters, customs and tax officers, clearance agents, containers and truck businesses representatives and quarantine officials, to identify export barriers.

The research team talked to respondents in key cross-border trade routes, including Kakkarbhitta-Panitanki, Birat-nagar-Jogbani, Birgunj-Raxaul, Bhairahawa-Sunauli, Nepalgunj-Rupaidia and Dhangadhi-Gaurifanta.

The central bank had outsourced the study to a group of researchers from Patan Multiple Campus.

According to the report, the majority of respondents blamed problems like power crisis, poor infrastructure, labour problems and excessive politicisation of labour, among other reasons. They termed procedural and policy barrier as secondary factors.

India has signed trade pacts with almost all South Asian countries, but only Nepal has failed to reap benefits from such pacts.

When Nepal and India renewed the trade treaty in 2009, Nepal’s share in India’s imports from South Asia was 27 per cent.

The report shows the average growth rate of Nepal’s exports to India over the period remained barely 6 per cent annually.

When Bangladesh signed the trade pact with India in 2006, its share in India’s imports from the region was just 9 per cent.

Pakistan’s share was 13 per cent during the signing of pact in 2006, and Sri Lanka’s share was 9 per cent in 2000 when two countries held a tea and garment meeting, a year after signing free trade agreement in 1999.

Ojha blamed lack of implementation of facilities included in India-Nepal bilateral trade agreement for falling exports. “There was almost zero progress on removing non-tariff barriers such as quality issues and transport connectivity,” he said.

Nepal faces a trade deficit of 377 billion Nepalese rupees (US$3.83 billion) with India as of the first 11 months of the last fiscal year, according to the NRB.

The country’s exports to India stood at just 54 billion Nepalese rupees ($549.3 million), against imports worth 431 billion Nepalese rupees ($4.38 billion).


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