Kathmandu - A new Nepal-India trade treaty came into effect Wednesday aimed at curbing unauthorised trade between the two countries. The treaty was signed by Nepal's Commerce Minister Rajendra Mahato and his Indian counterpart Anand Sharma in the Nepalese capital Kathmandu on Tuesday.
The new trade treaty replaces an agreement signed in 1991 and addresses changes that have taken place in bilateral, regional and international trade in the last 18 years.
The Nepalese minister told local media that he hoped the new treaty would help reduce Nepal's trade deficit with India and curb smuggling of goods.
"It will be a milestone for the country's exports if Nepal can produce quality goods at competitive prices," Mahato said.
The revision of an agreement of cooperation to control unauthorised trade allows re-export of goods manufactured and produced in one contracting party to third countries through the territory of another contracting party without any manufacturing activity.
It also removes non-tariff barriers and makes trade more transparent. The treaty has a provision for simplification of trade and transport-related documents and makes rules of origin, the duty refund procedure and tariff rate quotas favourable to both countries.
Indian Commerce Minister Anand Sharma said he hoped both Nepal and India would benefit from the treaty.
"It will reduce hurdles in trade between the two countries and create a better environment," Sharma said.
Two-thirds of Nepal's trade is with India and the trade volume has been growing. Since 1996, Nepalese exports to India have grown 13 times but imports from India have dominated trade.
