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Kathmandu Thursday December 27, 2001 Paush 12, 2058.
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Exports
to India
Kanchanpur district
imports more than 5,000 eggs daily from India as a result of the open border system that
has provided Indians easy access to Nepali markets. For the same reason, Nepal imports
ninety percent of its essential goods requirements from India. Besides, Nepalis living
near the Nepal-India border prefer Indian goods to Nepali simply because of the proximity
and familiarity with the brands. The age-old cultural ties between the two countries have
also cost Nepal more than India in terms of economic benefit. On top of that, India has
capped Nepal’s exports of five items, citing an export surge and absence of rules of
origin. New Delhi has even accused Nepal of dumping imported cheap and low quality Chinese
goods in the Indian market. But easy imports have left Nepal and its domestic industry
defenceless, especially after the government adopted a liberal economic policy. The
government has liberalized the economy in haphazard fashion, making Nepali markets prone
to
the dumping of Indian goods at considerable cost to Nepali economic interests. If the
government had taken some measures to protect the industries that manufacture essential
goods, the country would not have been so much dependent on Indian imports. The down trend
in the Nepali economy actually began after the government led by Girija Prasad Koirala
tilted heavily towards India purportedly for the economic development of this country. The
trade and transit treaty signed in 1990, right after the restoration of democracy,
contains provisions that benefited India more than Nepal. The treaty forced Nepal to
import ninety percent of goods from the southern neighbour, to the distress of Nepali
industry.
The trade treaty
between Nepal and India, which should have been renewed by December 5, has now been
extended by three months on an ad hoc basis as India has refused to continue accommodating
terms in that treaty which are favourable to Nepal. Indian has proposed not only
substantial value addition to Nepali goods headed for India as a condition for the treaty
renewal but also imposed anti-dumping duties. Such a move has placed Nepal in an
uncomfortable situation. India wants Nepal to ensure value addition of at least fifty
percent before it exports goods to India. If Nepal agrees to that it will be a big blow to
Nepali exports. Such a conditionality for which there is no provision in the treaty, will
also be hard to undo once it is accepted. It is now more worthwhile for both sides to
ponder how the flow of goods has affected the economies of both countries. The two must
sit together and seriously take up those aspects which have damaged parallel sectors of
our economies. While the export of Nepali vegetable ghee or any other item might have
captured less than one percent of the Indian market, it is the inflow of Chinese goods
which may have harmed the parallel sectors of the two economies. |
