National 8 (Spotlight Weekly)

Nepal-India: Economic Ties

By Rajendra K. Khetan

The country director of the Asian Development Bank (ADB) in Nepal, Dr. Richard Vokes, in a recent interview (Nepali Times weekly, January 17, 2003) noted that Nepal's economy is clearly linked with that of India (and that) if Indian economy grows it will have impact on Nepal. India is the biggest trade partner and single largest foreign investor in Nepal. It has also been one of the major donors for Nepal assisting in her modernization in a number of sectors including education, health and infrastructure . Over 1,750 km. long common, open border between the two countries mark not only the closeness but also the complementarities between them. In this backdrop, I would like to highlight recent landmarks in bilateral relations and the issues, especially related to the economy and business, which need to be focused for future cooperation.

Their Majesties visit to India:

Their Majesties King Gyanendra and Queen Komal's visit to India in June last year brought people of both the countries closer in terms of socio-political and economic relations. The visit by Their Majesties further enhanced cooperation in these areas. His Majesty's maiden visit was crucial in delivering towards promotion of direct people to people relations on economic spheres between the two countries. The state visit of Their Majesties was a grand success as members of the business delegation, both the officials and private sector of India expressed their full support to Nepal and we could see a number of positive developments within a few months of His Majesty's visit. Such high level visits, particularly between the two neighboring countries, strengthen the bilateral relationships and mutual understanding.

FNCCI-FICCI/CII:

We have agreed with the Federation of Indian Chambers of Commerce and Industry (FICCI) to set up joint task force to study hydro power and tourism potential in Nepal which could be harnessed towards win-win situation for both Nepal and India. FNCCI has already started homework to identify potentialities of these areas as well as problems therein and advise solutions to them. With the Confederation of Indian Industries (CII), we are working closely on bilateral trade issues with India based on the Nepal-India Trade Treaty that was renewed in March last year. We feel that such cooperation adds milestones to more closer economic ties between two good neighbors. The FNCCI delegation, that accompanied His Majesty during his state visit to India, found everybody in India especially from the business community very positive towards Nepal.

Economic Diplomacy: There exist some issues between Nepal and India, which in my opinion, are rooted more out of confusion and may have been intensified for lack of timely handling of such issues at the official level. The governments of both the countries need to sort out these problems through diplomatic channels in the best interests of both the countries. At the same time, there has to be more frequent communication and exchange of visits at political level. The Nepalese government and business community are looking forward to the early conclusion on the Railways agreement between the two countries in order to facilitate early operation of the Inland Container Depot (or, Dry Port) at Birgunj/Raxaul sector. Similarly, Nepal feels that there should not be any additional duty imposed by India. These issues are under discussion and more diplomatic approach is required to arrive at a mutually agreed understanding.

Nepal-India Inter-Governmental Committee (IGC):

Led by Commerce Secretaries of both the countries, IGC is a high level official forum that deals with all the trade related issues between the two countries. The last meeting of IGC held in mid-August in New Delhi was participated in by high ranking officials from Home, Finance, Transport, Foreign Ministries and embassies of both the countries. The private sectors in both the countries, led by FNCCI and CII, have extended full support to the IGC process.

Moving into the new millennium:

In his book 'Nepal at the Cross Roads' veteran Indian journalist L. P. S. Shrivastava has written that Nepal's interests and our friendship are not mutually incompatible. It cannot, however, be based just on a neighborhood policy. It has to be much deeper and durable. Disinterestedness shown either by India or Nepal will surely harm each others' national security and well-being.

The uniqueness of Nepal-India relationship, including that in the economic sphere, puts both the countries on the same plane. As the member of South Asian Association for Regional Cooperation (SAARC), both the countries are moving towards the South Asian Free Trade Area (SAFTA). Similarly, India has shown its keenness in fully supporting in Nepal's efforts to accede to the World Trade Organization (WTO). But it is true that Indian economy is much bigger and much dynamic than the Nepalese economy. So, we expect India to look at Nepal from development partnership point of view. A politically stable and economically vibrant Nepal is in the best interest of SAARC and the whole -world. Recent political developments in Nepal, especially the cease fire and preparation for peace talks between the government and Maoist rebels, raise hope towards revival of economic activities in this Himalayan kingdom. Nepal and India need to work together and very closely to meet new challenges and explore new opportunities. Of course, the private sector in both the countries will always take the lead in identifying issues of mutual interests, drawing out projects and implementing them for the best interests of people of both the countries that have been tied together by history, geography and common vision towards future. n

(Second Vice President and Spokesman of the FNCCI, industrialist Khetan is also the member of Nepal India Economic Forum)