Nepal asks India to cut remaining trade barriers

New Delhi, June 8 (UNI) As work gathers pace for renewal of the bilateral trade treaty in March 2007, Nepal today asked India to remove all restrictions on the 200 items which account for bulk of the trade between the two neighbours.

''India should offer increasing market for the Nepalese products.

With removing of barriers, the trade between the two countries can become unlimited,'' Nepal Finance Minister Ram Sharan Mahat said here at a luncheon meeting, organised by the Confederation of Indian Industry (CII).

Mr Mahat revealed that China has offered a Preferential Trading Arrangement (PTA) with Nepal. '' The People's Republic of China has also offered preferential trading arrangement to products manufactured in Nepal,'' he said.

China's offer to Nepal for a PTA has a significant bearing for the India since, the Sino-Nepal agreement could pave way for free Indian market access for the Chinese goods through Nepal.

As it is, the Indian industry and the Commerce Ministry has been pointing out a widespread misuse of the existing India-Nepal Treaty.

Mr Mahat said with increasing labour and operating costs production in India, the Indian companies can set up their manufacturing base in the Himalayan country.

''Nepal has cheap and abundant labour. Besides, the use of containerised rail transport with the completion of Inland Container Depot in Birganj has reduced the trade related transportation cost significantly,'' he said.

Referring to the attractive tax structure in Nepal with 20 per cent corporate tax for the manufacturing sector he said that the UNCTAD had concluded that the important factors which influenced their decision to invest in Nepal were investment profitability, ability to repartriate capital and earnings, transfer of technology and economic stability.

''With an average tariff rate of less than 9 per cent and a trade GDP ratio of more than 9 per cent and a trade GDP ratio of more than 50 per cent and virtually no quantitative restrictions, Nepal is still one of South Asia's most open and trade dependent economies,'' Mr Mahat said.

He said Nepal's strategic location is between the two emerging economies India and China, where Nepali exports enjoy preferential access, offer exciting possibilities and increase investment attractiveness of the economy.

Stating that his country looks forward to the renewal of the Indo-Nepal teaty , the Nepal Finance Minister said that the proximity of the large and growing Indian market continues to present Nepal with important opportunities to expand trade in goods and services where it has a comparative advantage.

The treaty gurantees almost all Nepalese manufactured products duty free access to the Indian market.

UNI ARB/PC PV ND1642