The governments of India and Nepal convened a virtual meeting of the Inter-Governmental Committee (IGC) on Trade, Transit, and Cooperation to Control Unauthorized Trade on 7 December 2020. The IGC is the highest bilateral mechanism for promotion of trade and investments between India and Nepal. The meeting reviewed the transit treaty that covers waterways and railway services between the two countries, and agreed to amend the bilateral transit treaty to further promote trade and connectivity.

The agenda of the meeting included a comprehensive review of the Treaty of Transit and the Treaty of Trade, amendments to the Rail Services Agreements, measures taken for investment promotion, constitution of a Joint Business Forum, harmonization of standards, synchronized development of trade infrastructure on the two sides, and a discussion of several government-led initiatives that will help further enhance trade and commercial linkages.

The IGC meeting delivered

• An agreement by both sides to amend the bilateral transit treaty. Currently, only government-owned railway services can transport cargo to Nepal. The proposed revision will open the service to private operators and allow the Nepal railway to be used for trade purposes, according to Mr. Baikuntha Aryal, Secretary, Ministry of Commerce and Supplies of the Government of Nepal. The date for the signing of the amended agreement will be decided upon endorsement of the amendment by the cabinets of the two countries.
• An update on customs infrastructure. The Government of India noted commencement of the construction of an Integrated Check Post (ICP) in Nepalgunj and the upcoming construction work on the facility in Bhairahawa.
• Noted requests related to trade and transit, such as (i) a request by Nepal for India to extend railway services up to the ICPs in Birgunj and Biratnagar, which were constructed with the support of the Government of India; (ii) a proposal by Nepal to construct a dry port at Dodhara Chandani, in addition to establishing an ICP and railway connection. Following India’s positive response, Nepal agreed to prepare a detailed concept paper and a feasibility study of a cross-border economic zone in the Dodhara Chandani-Banbasa area; (iii) a request by Nepal to allow their traders access to India’s Asian Highway 2 to conduct trade with Bangladesh since the existing Phulbari-Banglabandha trade route has become congested.

Both delegations acknowledged the newly-formed business forum of private sectors of both countries, and committed to facilitate their first meeting by the first quarter of 2021.

Related links:

Nepal, India to amend bilateral transit treaty to expand trade and connectivity

Press release by the Embassy of India in Nepal

India And Nepal Hold Virtual Meeting To Review Progress On Multiple Bilateral Agenda Items