Nepal’s wide trade gap with India hurting Indians  


    Nepal-IndiaSILIGURI: Political crisis, severe energy shortage and lack of financial strength: hit by all these, Nepal is facing a steep decline in its trade with its largest trade partner, India. Though apparently a problem for Nepal, thousands of Indian citizens are also affected by this situation.

    A large share of business establishments on Nepal’s border with India is directly or indirectly run by Indians. This is legal as under the Indo-Nepal treaty, 1951, citizens of one country can have trade or profession in the other. In addition, India and Nepal enjoy an open border and to travel between the countries, their citizens don’t need visas. These Indians are also victims of the situation.

    “Political stability is a must for any commercial activities. But that is in trouble in Nepal. In addition, oil or electricity, both are in severe shortage making industrial activities tough,” said B Jalan, a veteran businessman at Dhulabari, one of the main indo-Nepal trade centers in eastern Nepal, adjacent to West Bengal in India.

    Nepal’s rapidly increasing trade deficit with India has already become almost equal to 20% of its gross domestic product. As per official figures, Nepal’s imports from India in 2012 totaled Rs 22,500 crore, while exports, Rs 3,200 crore.

    Despite having 42,000 MW economically viable hydropower potential, Nepal’s present production is even bellow 1,000 MW, much less than its need. The situation sometimes compels the country to impose load shedding for as much as 12 hours a day. With Nepal’s payment to its only oil supplier, Indian Oil Corp, always under question, fossil fuel also remains in short supply.

    As a result, over 50% industrial operations are now almost dead, said members of the Federation of Nepalese Chambers of Commerce and Industry. As a new trend, entrepreneurs have started shifting in border adjoining Indian towns like Siliguri. But getting established there is another hardship, they said.

    Many new hydropower projects are in pipeline, under active support from India, to develop around total 18,000 MW of power by 2030. “These may revert the scenario, but only if the country finds political stability by then,” said P Srestha, a member of the industry federation.

    Source : The Economic Times