Shri Anand
Sharma, Union Minister of Commerce and Industry and Mr. Rajendra
Mahto, Nepalese Minister of Commerce and Supplies today
signed the 2009 India-Nepal Treaty of Trade and Agreement of Cooperation to
Control Unauthorized Trade. The 2009 Trade Treaty revises the 1996 Trade Treaty
between the two countries. The 1996 Treaty has been a turning point in the trade
relations between the two countries and resulted in phenomenal growth of
bilateral trade from Rs. 28.1 billion in 1995-96 to Rs. 204.8 billion in 2008-09. While the Nepalese exports to
India increased from Rs. 3.7 billion to Rs. 40.9 billion, the Indian exports to Nepal increased from
Rs. 24.4 billion to Rs. 163.9
billion during the period -1995- 2009.
After signing the agreement, Shri Sharma said, “There is need to shift the Indo-Nepal
trade to the higher level and attain better qualitative dimensions. The opening
of new lines of products and duty free access in India will provide further boost to the
growing Indo-Nepal Trade”, he added and hoped that the revised treaty would
help facilitate Trade by opening new land routes for trade between the two
countries. The current treaty is expected to provide further access to Nepalese
products into India and to enhance and expand bilateral
trade between the two countries, the Minister further added. The changes introduced in the Treaty are:
·
The
validity of the Treaty has been increased from five to seven years, along with
the provision of automatic extension for further periods of seven years at a
time. This will provide more stable
framework for bilateral trade and promote investments in Nepal based on preferential access
provided by the Treaty to Nepalese products.
·
No
discrimination will be made in respect of tax, including central excise, rebate
and other benefits to exports merely on the basis of payment modality and
currency of payment of trade. This will bring the bilateral trade conducted in
Indian Rupees at par with trade in convertible currency and will end the
existing mechanism of Duty Refund Procedure (DRP) which was procedurally cumbersome. It will provide Nepal a direct control on the customs
duty revenues on import of manufactured goods from India. It will also allow Indian exports
to avail benefit of export promotion schemes prevailing in India, making these products more
competitive for further sale or value addition in Nepal. (This change would be made
effective from the date to be mutually agreed to. Modalities will be developed
for smooth transition from the existing to the new system.)
·
The
time limit for temporary import of machinery and equipment for repair and
maintenance has been raised from 3 to 10 years.
·
Several
new items of export interest to Nepal have been added to the list of
primary products giving these items duty free access to India without any quantitative
restrictions. These include floriculture products, atta,
bran, husk, bristles, herbs, stone aggregates, boulders, sand and gravel.
·
Criterion
for calculating value addition for gaining preferential access to India has been changed from ex-factory
basis to FOB basis.
·
India has agreed to consider waiver, on
request from GON, of any additional duty that may be levied over and above CVD.
·
Both
sides have agreed to exempt exports of goods, which are already covered under
forward contract, from imposition of restrictions on exports.
·
Both
sides will grant recognition to the sanitary and phyto-sanitary
certificates issued by the competent authority of the exporting country based
on assessment of their capabilities.
·
Articles
manufactured in Nepal, which do not fulfill the criteria
for preferential access will be provided MFN access to the Indian market. The certificate of origin in case of such
exports has been prescribed.
·
The
provisions regarding safeguard measures in case of serious injury to the
domestic industry have been streamlined.
·
A
joint mechanism, comprising local authorities has been established to resolve
problems arising in clearance of perishable goods.
·
An
Inter-Governmental Sub-Committee (IGSC) at the joint secretary-level has been
established. Existing
Inter-Governmental Committee (IGC) at the Secretary-level will meet once in six
months and the IGSC will meet at the interval of the two IGC meetings.
·
Four
additional Land Customs Stations (LCSs) will be
established to facilitate bilateral trade: Maheshpur/Thutibari
(Nawalparasi); Sikta-Bhiswabazar;
Laukha-Thadi; and Guleria/Murtia,
bringing the total number of Stations to 26.
·
Bilateral
trade will be allowed by air through international airports connected by direct
flights between Nepal and India (Kathmandu/Delhi,
Mumbai, Kolkata and Chennai).
·
The
Indian side has agreed to review and simplify the existing administrative
arrangements for operationalisation of fixed quota
for acrylic yarn, copper products and zinc oxide.
·
India has agreed to consider several
additional products as wholly produced or manufactured in Nepal for the purpose of gaining
preferential access to the Indian market. It includes articles collected in Nepal fit only for recovery of raw
materials and waste and scrap resulting from manufacturing operations in Nepal.
·
India has agreed to assist Nepal to increase its capacity to trade
through improvement in technical standards, quarantine and testing facilities
and related human resource capacities.
The main features of the 1996 Trade Treaty were:
·
Duty
free access to each other’s primary products as per agreed list.
·
Nepalese
manufactured products are allowed non-reciprocal access to the Indian market,
free of basic customs duty, provided the goods are manufactured with Nepalese
and/or Indian inputs. If third country inputs are used, at least 30% value
addition is required to attract duty free access.
·
Annual
quotas for duty free access in respect of four items – vegetable fats (100,000
tons) acrylic yarn (10,000 tons), copper products (10,000 tons) and zinc oxide
(2,500 tons);
·
MFN
access for three items – cigarettes, alcohol (excluding beer) and cosmetics
with non-Nepalese and non-Indian brands;
·
Goods
manufactured by small scale units in Nepal enjoy the same benefits as SSIs in India with regard to tax exemption;
·
Designates
twenty two points on India-Nepal border for bilateral trade.
India-Nepal sign treaty of Trade & Agreement of Cooperation to Control Unautherized Trade
