Nepal facing downward trend in bi-lateral trade with its largest trade partner India

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    SILIGURI: Crippled with political crisis and severe energy as well as power shortage, Himalayan country Nepal is in front of a big question. ‘For how long can it withstand the deteriorating bilateral trade scenario with its largest trade partner India mainly because of these crises?’

    “Stability in administration and governance are must for smooth and full capacity running of any commercial activity. And that is missing here. More importantly with virtually no power or no fuel has made running industry or trade too difficult here. Leave the question running full fledged aside, we are forced to scale down wherever possible. The situation is gradually making the whole country too dependent on external resources,” said Mr. B. Jalan, a veteran businessman of Dhulabari, one of the main indo-Nepal trade centers in eastern Nepal adjoining to West Bengal in India.

    Traditionally, industrially backward Nepal remained highly dependent on import especially from India, its next door neighbor. After signing up of bilateral trade treaty between the two countries in 1996, the situation took a healthy turn for Nepal. After a growth of 800% in its export to India and 100% growth in import, According to Trade and Export Promotion Centre of Nepal statistics, Nepal’s official import from India went up to INR 65,500crore against export of 1,500 crore.

    But the trend started taking steep downward turn again following political turmoil in the country.

    Despite having 42,000MW economically viable hydropower potential Nepal’s present production is even bellow 1000MW, much less than its need at peak hour. The shortage frequently forces the country’s national power monopoly, Nepal Electricity Authority, to impose mandatory load shedding for even 12 hr a day.

    Fossil fuel is also always in short supply. The regularity of financially crunched Nepal’s payment to its only oil supplier Indian Oil CorporationBSE -1.48 % always comes under question forcing it to face frequent and severe shortage in hydrocarbon.

    “Over 50% industrial operations are now almost dead,” said Nepal’s major trade and commerce association members. “As a new trend, traders, entrepreneurs have started shifting in border adjoining Indian towns like Siliguri after liquidating assets or converting them into Gold,” said traders in Dhulabari. Government’s continuous assurance for ‘peaceful business environment’ could not make them confident enough.

    Thus, “The situation is too difficult now and policy makers must take action on war footage,” said a Federation of Nepalese Chambers of Commerce and Industry (FNCCI) member.

    Source : Economic Times