New Indo-Nepal economic pact in pipeline

September 23rd, 2008 - 4:07 pm ICT by IANS  

Manmohan SinghKathmandu, Sep 23 (IANS) A new economic pact between India and Nepal is in the pipeline with its seeds sown during Nepal’s new Maoist Prime Minister Pushpa Kamal Dahal Prachanda’s maiden official visit to India earlier this month.Jairam Ramesh, the Indian minister of state for commerce and power, who is in Kathmandu on a three-day visit to attend a major Indo-Nepal power summit, told the media Tuesday that he would be holding talks with Nepal’s Commerce and Supplies Minister Rajendra Mahato over the new Comprehensive Economic Partnership Agreement that India wants to sign with its neighbour.

The agreement proposes to bring trade, services and investment under the same ambit and is likely to be the first agreement between New Delhi and Kathmandu’s new Maoist-led government.

“India has a similar agreement with Singapore,” Ramesh said. “Negotiations are also on to sign similar agreements with Sri Lanka and Mauritius.”

Earlier this month, Prachanda headed a 44-member delegation to India on a five-day visit during which he discussed the pact with Indian Prime Minister Manmohan Singh.

In mid-October, Nepal’s commerce secretary will visit New Delhi to attend the meeting of the Inter-Governmental Commission that will take forward the parleys between the two prime ministers and discuss the establishment of a joint study group to come up with a draft of the agreement.

Ramesh said the draft could take 18-24 months while the agreement could be inked in two to three years.

“In the long run, investment will run our bilateral relationship,” said the Indian minister, who is in Nepal to encourage power trade between the two neighbours. “It will also be the only way in which Nepal can manage its trade deficit with India.”

Nepal and India, which enjoy a blow hot blow cold relationship, have a trade and transit treaty, an extradition treaty, a peace and friendship treaty and several water resources sharing pacts.

However, most of Nepal’s major political parties have been expressing dissatisfaction with the pacts, calling them unequal and asking for their review if not outright abrogation.

During his India visit, Prachanda said he raised the subject and opened negotiations on reviews, especially regarding the controversial 1950 Peace and Friendship Treaty, which had become outdated.

The new economic agreement comes at a time when Nepal’s first Maoist government has pledged an economic revolution with the generation of 10,000 MW of power in the next decade and to take the average income to double digits.

The Prachanda government is also seeking greater Indian investment in Nepal, especially in priority areas like hydropower, infrastructure and agriculture.

In a bid to boost trade between the two countries, Ramesh said New Delhi has allocated Rs.3.4 billion to upgrading infrastructure at four major Indo-Nepal border points at Birgunj-Raxaul, Biratnagar-Jogbani, Bhairahawa-Sunauli and Nepalgunj-Rupaidiha.

The work would upgrade roads, quick immigration facilities, customs clearance, banking, communications and testing facilities.

The Birgunj-Raxaul check point alone saw an import-export volume worth Rs.30 billion in 2007-8.

“Non-tariff barriers remain the greatest obstacle in the Indo-Nepal trade,” the minister said. “Nepal has said the major hurdle is getting tests conducted on food and agriculture products.”

As a goodwill gesture, Ramesh would be asking the Nepali minister to identify testing facilities in Nepal. India would then upgrade them at its own cost so that the testing and quality certification can be done in Nepal, saving traders time, money and hassles.

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