Nepal has started to look at alternatives for investment due to a vacuum of investment from India.
The communist government in Nepal is not pro-China but a vacuum of investment from India has led the Himalayan nation look for alternatives even as India is a natural partner, SAARC CII President Suraj Vaidya said.
"Nepal would always want to work with India, but I think India right now is looking at getting investment in India at the moment so there is a vacuum of investors in Nepal," Vaidya, who is a Nepalese entrepreneur, told PTI in an interview.
He said Nepalese people also need jobs and want investment to come up but investment from India has dried up since long.
"So if no Indian investment is coming to Nepal, we have to look for other investments...Chinese are bound to become the largest investor in the world. What I want to tell India because we are a communist party, we are not pro-China," Vaidya said in an interaction on the sidelines of SAARC CII Business Leaders Conclave held between March 16-18.
"We should not fall into a death trap like Sri Lanka is falling into. We should be careful about that we should not allow Nepal to be used as a territory to go against India. My prime minister made this amply clear that we want to work with India and give us that space to work with India," Vaidya said.
Highlighting the need for investments, specifically after the deadly earthquake that rocked the country in April 2015, he said Nepal is squeezed between India and China and wants funds to come in.
"I speak this for Nepalese people that we are not brains one against the other. That politics is gone and dead, it doesn't exist today, but what exists is the investment.
The last investment from India was when the likes of Dabur, ITC and Unilever entered Nepal, but after the mid-1980s there have been no large Indian investors.
"The large investors have been Chinese and what's, even more, worrying for us is because Nepal is getting a very bad name for this. For most of the hydropower projects, licences are taken up by Indian companies, but today those large companies are selling the licences to the Chinese people and this is not something that Nepal wants," he stressed.
He said Nepal wants India to invest in the country but the selling of business licences to the Chinese is earning a bad name for the country and giving the impression as if Nepal is encouraging Chinese investment which is not the case.
Talking about the eight-nation South Asia Association for Regional Cooperation (SAARC) grouping, he said a leadership role by India will be critically important at this point where there is a growing sense of protectionism across the globe.
Last one year has seen a lot of inward looking protectionism affecting the international trade, specifically with the US pulling up some very major important regional cooperation which has sent a very wrong message.
With Brexit, it also sends a terrible message for regional cooperation, the eight-nation SAARC has much to achieve as the private sector is keen to invest in the region.
However, he said it is unfortunate that the regional political agenda overshadow the economic agenda of South Asia.
Vaidya emphasised for a greater political will amongst the SAARC countries to remove trade barriers to allow free movement of trade, services as well as people.
It is a hindrance that goods cannot move from India to Afghanistan through Pakistan, it is also a hindrance when Nepal cannot take goods from Bangladesh to trade with them directly because of the absence of motor vehicle act, he said.
"It is also a problem when Nepal cannot send power to Bangladesh which requires power because we don't have a transmission agreement. The governments have taken bilateral trade agreements at most of the times than multi-lateral agreements which is a problem," he said giving instances of problematic areas.
Speaking on the escalating tensions between Pakistan and India, Vaidya said there is no alternative to dialogue between the two nations to resolve tensions which will bode well for the rest of smaller nations such as Nepal and Bhutan in the region.