Freight forwarders have urged Prime Minister KP Sharma Oli to talk with the Indian government about simplifying cross-border cargo movement during his three-day state visit to India which starts on April 6.
Expressing concern that non-tariff measures in cargo movement had increased the cost of trading, the private sector has asked the government to lobby the southern neighbour to facilitate trade.
Among the issues that freight forwarders have requested Prime Minister Oli to raise during his India visit are allowing the use of alternative routes for conducting trade with Bangladesh and Bhutan, simplifying the documentation process at Kolkata Port and allowing the use of rail services other than Indian Railways for transporting goods between Kolkata and Birgunj Dry Port.
Although India has allowed Nepali traders to use the Panitanki-Siliguri-Phulbari-Bagalabandh route to conduct trade with Bangladesh, they have not been able to benefit from it due to restrictive measures imposed by India.
Rajen Sharma, past president of the Nepal Freight Forwarders’ Association, said Indian authorities did not permit Nepali and Bangladeshi trucks to pass through the 40-km-wide strip of Indian territory separating the two countries. “Cargo destined for Bangladesh has to be transferred to Indian trucks while crossing Indian territory,” Sharma said.
India conducts trade with Bhutan and Bangladesh over the Chyangra Bari-Phudi Bari and Petrapole-Benapole land routes respectively. Sharma said Nepal should lobby India to open these alternative gateways to Nepali traders. “The trade routes could help a landlocked country to benefit from bilateral trade with Bhutan and Bangladesh.”
Apart from sanitary and phytosanitary standards (SPS) and technical barriers to trade (TBT), Nepali exporters have to face hurdles such as restrictions on cargo movement while exporting goods to India and third countries. This has not only increased costs for Nepali traders but also held back the growth of exports, officials said.
According to the Trade and Export Promotion Centre (TEPC), Nepal’s trade deficit soared 19.1 percent to Rs613.72 billion in the first seven months of the current fiscal year. Slow growth of exports is one of the major causes for the widening trade gap. During the period, shipments from Nepal rose a mere 11.9 percent to Rs47.50 billion.
Sharma also wants the government to talk about revising the railway service agreement and trade treaty with India. Under this agreement, Nepali traders can only use trains operated by state-owned Concor, a subsidiary of Indian Railways, to transport third country imports from Kolkata Port to Nepal. The restriction on using other rail services has been blamed for creating hurdles to Nepal’s third country trade.
As per freight forwarders, Nepali traders have to wait for at least four days to get clearance from Indian authorities at Kolkata Port. Containers are transported to Nepal only after 20 days as Concor delays taking charge of the cargo that has been cleared through the port.
“However, the company provides a turnaround time of only 28 days for Nepal bound containers,” said Sharma. As a result, importers often have to pay demurrage due to delays by the cargo operator, he added. According to him, the shipping company charges IRs10,000 per container per day as demurrage.
Likewise, the documentation procedure is another hurdle that Nepali importers have to face while trading through the Kolkata gateway. “Nepali traders have to produce hard copies of documents. If electronic documents are accepted at the port, it will ease the trading process,” Sharma said.