1. 1 REVISITING NEPAL-INDIA TRADE TREATY PRESENTATION BY J.P. AGRAWAL Date: 14.01.2009

2. 2 1. OBJECTIVES OF THE TREATY NEED REDIFINING Mutually beneficial. Mutually beneficial. Comprehensive & open to include trade, investment and service sectors. Comprehensive & open to include trade, investment and service sectors. Enabling umbrella treaty for any commercial issues. Enabling umbrella treaty for any commercial issues. Facilitating transit for intra-country trade promotion. Facilitating transit for intra-country trade promotion. Prevention of unauthorized trade and any other economic offences across the border from both the sides. Prevention of unauthorized trade and any other economic offences across the border from both the sides. Avoidance of double taxation. Avoidance of double taxation. Sectoral agreement under the umbrella treaty. Sectoral agreement under the umbrella treaty. Reducing transaction costs and time in doing business between the two countries Reducing transaction costs and time in doing business between the two countries

3. 3 2. STRUCTURE OF THE TREATY Perennial. Perennial. Enforceable in any court of law in India and Nepal. Enforceable in any court of law in India and Nepal. Predictable. Discretionary powers avoided / balanced. Predictable. Discretionary powers avoided / balanced. Integrated approach to trade, investment, services, transit and diversification. Integrated approach to trade, investment, services, transit and diversification. Reciprocal but not apple to apple. Flexibility to give concessions as per the development status and ability. Reciprocal but not apple to apple. Flexibility to give concessions as per the development status and ability. Emphasis on Emphasis on Macro economic stability. Macro economic stability. Good investment climate. Good investment climate. Transparent procedure Transparent procedure Adequate infrastructure Adequate infrastructure Integrated approach Integrated approach

4. 4 3. Nepal-India Trade Development Board. Promoting Agency. Promoting Agency. Dispute settlement. Dispute settlement. Address Economic offences. Address Economic offences. Interpretation / adjudication. Interpretation / adjudication. Achieve targeted volume of trade and investment within a given time frame. Achieve targeted volume of trade and investment within a given time frame. Procedural simplification, consolidation and publication. Procedural simplification, consolidation and publication.

5. 5 4. National treatment to Nepali manufactured goods for access to Indian market. Green channel for goods manufactured out of 90% Nepali and / or total Indian material and the agro- products. Green channel for goods manufactured out of 90% Nepali and / or total Indian material and the agro- products. Concession are given as per the adjoining Indian state in addition to exemption of Indian custom duties. Concession are given as per the adjoining Indian state in addition to exemption of Indian custom duties. Non-tariff barriers not applicable on National treatment goods. Non-tariff barriers not applicable on National treatment goods. Pre-shipment inspection by recognized certifying bodies enough for access to Indian Market. Pre-shipment inspection by recognized certifying bodies enough for access to Indian Market. Registration of trading house for green channel concession. Registration of trading house for green channel concession. Criterion for National treatment. Criterion for National treatment. Goods Produced out of 90% Nepali and or Indian Material. Goods Produced out of 90% Nepali and or Indian Material. Nepali Agro-product. Nepali Agro-product. Nepali primary product. Nepali primary product. Goods produced in Nepal-India Joint venture. Goods produced in Nepal-India Joint venture.

6. 6 6. Emphasis on transformation and manufacturing activities for rule of origin rather on value addition for access to India market. 7. Abolition of Duty refund procedure system. Allow Indian goods to Nepali market without payment of excise duty irrespective of the currency of payment. 8. Transportation is the major bottleneck adding to costs and competitiveness. It is a business opportunity which treaty should facilitate. 9. Surge and injury to domestic products, anti-dumping duty, safety measures are grey areas which are taken recourse to by vested interest groups. These need transparency.

7. 7 10. New areas for Joint Investment. a. Contract farming Contract farming Contract manufacturing Contract manufacturing Establishment and management of SEZ Establishment and management of SEZ Entertainment industry. Entertainment industry. Intra-city transportation. Intra-city transportation. Infrastructure building. Infrastructure building. Urban development. Urban development. Telecommunication. Telecommunication. Bio-fuel production. Bio-fuel production. Alternative energy. Alternative energy. Health and education. Health and education. b. Facilitate joint investment and efforts not only for each others’ market but for 3 rd country export.

8. 8 11. Simplification of procedures a. Take an integrated approach to simplifying procedures. Procedures should be readily available for reference purpose. b. Single Window Inspection c. Shared border facilities Equipment Equipment Infrastructure Infrastructure Date Date Intelligence Intelligence Documents Documents Any other Any other

9. 9 12. Preserve and leverage the following achievements. Free movement of goods, services and people. Free movement of goods, services and people. Open border. Open border. Payment of goods and services in Indian currency. Payment of goods and services in Indian currency. Right to engage in economic activities in each other country. Right to engage in economic activities in each other country. These be incorporated in treaty of trade.

10. 10 13. Misc Issues a. Provision for import of second hand machinery by Nepal. b. Export of 3 rd country or Indian Plant and machinery for repair and maintenance into India. c. Sales of 3 rd country or Indian second hand plant and machinery into India. d. Import of 3 rd country goods from India to Nepal. e. Formal linkages between capital market of both the countries need to be established. f. Nepal has to open up permission for joint ventures in India and abroad. g. Export and Import of scrap & wastages. h. Protection of intellectual property rights.