During my tenure as ambassador to India for two years and four months, I witnessed numerous high-level visits between Nepal and India, including eight significant engagements.
These discussions often centered around critical issues such as floods, trade, and infrastructure projects, consuming extensive documentation. As we consider our path forward, it’s crucial to establish clear priorities.
Emphasis on Long-Term Contracts
One of the foremost priorities should be the establishment of long-term contracts between Nepal and India.
While short-term agreements may seem financially advantageous initially, they create uncertainty for investors. I engaged with Indian officials for several hours, discussing the need for stable, long-term agreements.
The Prime Minister of Nepal has also acknowledged the importance of this approach. By ensuring long-term commitments, we can secure investments, increase exports, and enhance economic cooperation with both India and third countries.
Development of Energy Projects
Our energy sector holds immense potential, particularly in the production of 10,000 megawatts of power through joint initiatives with India.
It is critical to implement this agreement. The capabilities of the Biratnagar lab must be evaluated to ensure it can meet the standards required for products exported to India.
We currently have around 941 MW of electricity production capacity, and if we can export even 10% of this, it would significantly boost our economic interactions.
Several projects are in the pipeline, including those by NHPC and Sutlej. The long-discussed Pancheshwar project, expected to generate 5,600 megawatts, and other initiatives like Upper Arun and Tamor are promising.
By simplifying production processes and enhancing cooperation, we can overcome existing challenges and maximize output.
Enhancing Infrastructure and Connectivity
Strengthening infrastructure and connectivity between Nepal and India is critical for facilitating trade and movement.
Currently, four high-voltage transmission lines are necessary to support the energy trade, with one completed and another under construction.
Agreements are being finalized to ensure efficient energy transfer between our nations. Enhanced connectivity will not only boost trade but also deepen people-to-people relations, fostering a stronger bilateral relationship.
Trade and Investment Promotion
Given the significant flow of goods and people between our countries—illustrated by the 641,000 vehicles and 17,000 bus trips entering Nepal from India last year—prioritizing trade and investment is essential.
We must explore opportunities for increasing trade volumes and diversifying the types of goods exchanged.
Engaging in dialogues to establish favorable trade agreements can facilitate this growth.
Addressing Natural Disasters and Environmental Challenges
Finally, we must prioritize addressing the impacts of natural disasters, such as floods and landslides, which have severely affected our infrastructure and economy.
Collaborative efforts with India in disaster management and environmental sustainability are vital.
By sharing expertise and resources, we can better prepare for and mitigate the effects of such events in the future.
In summary, as we move forward in our relationship with India, focusing on these five priorities—long-term contracts, energy project development, enhanced infrastructure, trade and investment promotion, and disaster management—will create a solid foundation for future cooperation and mutual benefit.
Second Priority: Trade Expansion with Bangladesh
Initially, there was a claim that there was no ‘spare capacity’ in the transmission line for trading electricity with Bangladesh.
However, Bangladesh later identified an available capacity of 40 MW, which became a significant figure in our discussions.
India also expressed support for this initiative, stating that it aligns with the BBIN (Bangladesh, Bhutan, India, Nepal) and BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) frameworks.
Furthermore, the ambassador of Sri Lanka has indicated interest in purchasing energy from us.
When it comes to clean energy pricing, India is slightly more expensive than Nepal, while Bangladesh is pricier than India, and Sri Lanka’s prices exceed those of Bangladesh.
Overall, this development represents a positive start, and now it is crucial for us to focus on concrete actions to be taken over the next three to five years.
Third Priority: Quarantine
Quarantine has been a topic of ongoing discussion with Indian officials. Currently, both the lab in Kathmandu and the new lab in Biratnagar are operational.
However, the Biratnagar lab is facing staffing challenges, with only three technical staff members.
When I spoke with the Ministry of Finance, they mentioned challenges in finding a suitable building for additional staff.
Upon further investigation, it was revealed that while there were 15 administrative staff, only three were technical.
This discrepancy highlights the need to increase technical personnel, although it may take another three years for this to be realized within Nepal’s administrative framework.
Under the current arrangement, food products can be exported to India after approval from either of the two labs.
Additionally, there is a negative list related to quarantine, with inspections currently conducted at 15 locations.
Nepal has requested more quarantine offices in four specific areas, and India has expressed willingness to support this based on trade volume and potential.
Addressing quarantine and food production issues remains a priority. While we have made some progress, it is essential to activate inspection offices on both sides to streamline this process.
Fourth Priority: Industrial Production
Recent developments have impacted industrial production, particularly due to the ban on approximately 732 products from China by India’s Bureau of Indian Standards (BIS).
This ban has repercussions for Nepal, as well as for other countries, including Vietnam. This topic has been a significant part of our discussions.
Another aspect that remains to be addressed is mobile-to-mobile transfers. While the necessary infrastructure has been established, this initiative has been informally agreed upon for discussion during a high-level visit. This is a priority project for India as well.
The Nepal Standard (NS) has been prepared by the Ministry of Industry, and an MoU exists between NS and BIS.
It is critical to implement this agreement. The capabilities of the Biratnagar lab must be evaluated to ensure it can meet the standards required for products exported to India.
If the lab cannot adequately assess these products, we need to make upgrades.
Should we lack the necessary staff, machinery, or facilities, we must seek technical support.
By addressing these gaps, we can facilitate smoother industrial production processes and enhance our export potential.
Fifth Priority: Cross-Border Digital Payments
Fifth Priority: Cross-Border Digital Payments
Another priority on my agenda is the implementation of cross-border digital payments between Nepal and India, which has progressed more rapidly than expected.
Currently, around 6 million Indian rupees are transacted daily in Kathmandu, amounting to approximately one crore rupees in trade with India.
A persistent issue has been the limited acceptance of 500-rupee notes. Instead of continuing to raise concerns with India regarding these notes, we should advance cross-border digital payments and simplify the process of opening bank accounts.
Nepalis with bank accounts can now send up to 200,000 rupees to India. Those without accounts can send up to 50,000 rupees through banks in the name of family members. Integration with Aadhaar for smoother transactions is also necessary.
Furthermore, an agreement has been reached allowing Nepalis to open accounts in India based on recommendations from our embassy, although this has yet to be implemented. If realized, it would greatly facilitate the financial transactions of workers in India.
Another aspect that remains to be addressed is mobile-to-mobile transfers. While the necessary infrastructure has been established, this initiative has been informally agreed upon for discussion during a high-level visit. This is a priority project for India as well.
For this purpose, a joint secretary from India should visit Nepal and engage in discussions at the Nepal Rastra Bank. Previously, after I sent a representative from NPCI in Mumbai to Delhi, they indicated readiness to proceed pending government approval.
Following persuasion from the Government of India, they visited Nepal Rastra Bank, made a proposal, and brought it forward during our Prime Minister’s visit. This remains a top priority for me, along with several other initiatives.
(Edited excerpt from the speech delivered by Dr. Shankar Sharma, Nepal’s former Ambassador to India, during an interaction program organized jointly by the Institute for Strategic and Socio-Economic Research (ISSR) and Khabarhub, focusing on Nepal-India bilateral relations on Monday)
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