Trade Transit Time and Cost Matters

A lot is on the agenda of Nepal Government to provide faster transit for trade at lower cost. H.E. Eaknarayan Aryal, Consul General, Consulate General of Nepal in Kolkata details on the soft and hard infrastructure being developed

  1. How is the current scenario of cargo movement between Nepal and India?

Government of Nepal has been taking up various initiatives to build infrastructure, new projects are concentrated especially for improvement of living standards of people. Accordingly the cargo movement between Nepal and India is increasing. Currently, the cargo that comes to Kolkata or Vizag has to go by road or rail to Nepal. This is because the trade treaty recognises only these two modes of transport. While cargo from Vizag Port doesn’t move to Nepal through road, a large section of third-country container imports through Kolkata take the road. ECTS has resulted in a shift of cargo from Kolkata Port to Vizag Port.

  1. How can the exports from Nepal be increased?

It is time to sketch the export management approach for Nepal in the development plans, policies, and programs. In order to increase exports, structural reforms in Nepalese economy have already started. New trade policy, Nepal Trade Integration Strategy 2016, recognizes the potential products for export sectors in agro and forest-based products like ginger, cardamom, tea, coffee, medicinal herbs, crafts and manufacturing products like handicrafts, pashmina, and yarn etc.

Various steps have been taken and provisions have also been made in sectoral strategic policies and recent budget to increase production. Quality improvement of agricultural, forest and industrial products will help to increase the contribution of industrial sector to the economy together with import substitution.

  1. Nepal trade is looking forward for access to Paradip and Dhamra Ports in Odisha? How will this benefit Nepal trade and what is the current status of this move?

We are looking forward for access to Dhamra Port on the east coast and Mundra Port on the west coast. Dhamra Port will help Nepal trade with transit time and cost benefit on ocean freight and likewise Nepal trade will have direct access to Middle East and European market with faster transit through Mundra Ports. We proposed to Govt. of India to extend this connectivity and smooth movement of transit cargo. Both the ports will be incorporated in Transit Treaty with the Letter of Exchange.

  1. What steps do governments in India and Nepal further need to take to facilitate smooth movement of cargo?

The inadequate infrastructure, poor road condition and congestion at the border points are the major issues which need to be taken care. The ICP’s under constructions are to be completed at earliest, railway connectivity to be provided to ICD’s and ICPs to facilitate trade. Both governments have to work closely to digitalise movement of cargo. For smooth movement of cargo both countries have to prioritise trade simplification, harmonization, standardization and modernization of Customs procedures.

  1. What is your assessment of the implementation of ECTS?

ECTS is expected to bring in efficiency and transparency in entire supply chain by cutting the procedural delays, paper work and improving end to end container visibility. The system has already been introduced at Vizag Port in line with a project undertaken by the Asian Development Bank (ADB) and was introduced by Kolkata Port from 15th February 2019. As of now, it has been implemented as a pilot project with a view to have seamless movement without presenting documents, provide faster transit and reduction in cost. We are able to achieve first two goals but are disappointed on the cost front. Our business fraternity is questioning about increasing cost. We expect shipping lines to reduce inland haulage cost.

  1. Nepal is looking at inviting private rail operators and even thinking of owning a rail network? What prompted for this plan and how do you intend to execute this?

CONCOR is the only rail operator for Nepal bound movement. With participation of private rail operators efficiency of service will increase and the transit cost will decrease which certainly benefit the Nepal trade. Due to lack of sufficient number of rakes Nepal trade is bearing high demurrage and detention. We have Railways Service Agreement 2004 between the two countries but since then trading patterns have changed and trade volumes have increased. In this context government of Nepal is focusing at extend connectivity through road and rail. The Department of Railways in Nepal has a plan of building 4,000km railway network in two decades.

  1. Inland Waterways is another pet project of Nepal government? What is the status and what are future plans?

During our Hon. Prime Minister Sri. KP Sharma Oli’s visit to India in April last year, both sides agreed to explore the possibility of inland waterways via India and assigned officials to carry out the feasibility study. An understanding to incorporate inland waterways facilities in Transit Treaties was made during a joint meeting of senior officials from Nepal and India held at New Delhi in March, 2019. Joint technical team conducted several field visits to various Indian navigation points to figure out how Nepal can expand its transit facilities through waterways.

The technical team had identified Koshi and Narayani River for waterways connectivity. The Sahibgunj and Kalughat routes via Haldia port as the most viable routes for inland waterways transit between the two countries and subsequent movement to Biratnagar and Birgunj by Raod. Nepal has recently set up its Vessel Registration Office for ship registration and facilitation of maritime trade.

  1. How is the government planning to improve road infrastructure and connectivity from border check posts to the hinterland?

Necessary budget has been allocated to upgrade the East-West highway, construct Kathmandu-Nijgarh fast track, Puspalal (Middle Hills) highway, postal highway and develop the national highways as express highways. Construction of a tunnel will start in the Naubise-Nagdhunga section of the prithivi highway from the coming fiscal year. Govt. of Nepal has a plan for developing infrastructure to connect each province with at least one international commercial transit point.

  1. Improving efficiency in Customs clearance procedures is another major concern of shippers in Nepal. How can the functioning of Customs be made more efficient?

Department of Customs had prepared its four year Customs reforms, modernisation Strategies and Action Plan in 2017. The plan has outlined the professionalization of Customs service, fair and accurate revenue collection and improve Nepal Customs to international standard. Customs Act is under revision and very soon we will have a New Customs Act which will further facilitate the trade and efficiency will be improved.

  1. Bringing different government agencies together to create a single window for trade can further improve ease of doing business. Is the Nepal government taking up any initiatives in this regard?

The single window system will help to reduce entrepreneurs time and cost. The work on creating National Single Window is in progress. I believe, Ministry of Industry, commerce & supply, Department of Commerce have already selected the company to design and build National Single Window System in Nepal. The government has also formally begun one-stop service for investors in the country since 15 May 2019. The one point service centre for investors and businesses is located inside the Department of Industry, with the objective to provide effective and quick services like approvals, registration and other administrative services to investors.