Exporting Goods from India to Nepal

Summary

Exporting goods from India to Nepal follows a well-defined process governed by Indo-Nepal trade agreements, customs regulations, and GST compliance. Goods must pass through designated land customs stations, and exporters must adhere to specific documentation and licensing requirements. This guide provides a structured approach, covering key legal provisions, required documents, procedural steps, and the rebate system for duty-paid exports.

Introduction

India and Nepal share a strong trade relationship, with India being Nepal’s largest trading partner. The Indo-Nepal Treaty of Trade governs bilateral trade, ensuring streamlined transactions through designated routes and compliance measures. Exporters must understand legal provisions, customs requirements, and payment mechanisms to facilitate smooth cross-border trade.

Benefits of Exporting to Nepal

1. Zero-Rated GST Benefits – Exports to Nepal are exempt from GST, allowing exporters to either claim a refund on IGST or export under LUT (Letter of Undertaking) without paying IGST.
2. Multiple Transportation Modes – Goods can be transported via road, rail, or air, providing logistical flexibility.
3. Rebate and Refund Mechanism – Duty-paid goods qualify for rebates, ensuring cost-effectiveness for exporters.
4. Flexible Payment Options – Payments can be made in Indian Rupees (INR) under RBI guidelines or in freely convertible foreign currency under the in-bond system.
5. Simplified Customs Process – Designated border checkpoints ensure systematic customs clearance and ease of documentation.

Essential Requirements for Exporting to Nepal

1. Importer Exporter Code (IEC) – Mandatory registration with DGFT (Directorate General of Foreign Trade).
2. Regulatory Compliance and Documentation – Ensuring necessary permits and certifications under GST and customs regulations.
3. Customs Clearance through CHA (Customs House Agent) – Engaging an authorized CHA simplifies export procedures and ensures regulatory compliance.
4. Designated Trade Routes – Exports must pass through 22 designated land customs stations, such as Raxaul-Birgunj and Sunauli-Bhairahawa.
5. Product-Specific Licensing – Special approvals from authorities like FSSAI (for food products), PQC (for agricultural products), and DCGI (for pharmaceuticals) are required where applicable.

Step-by-Step Procedure for Exporting to Nepal

Step 1: Business Registration

Ensure your firm is registered with:

• Ministry of Corporate Affairs (MCA), India
• DGFT (IEC Registration)
• GST Registration (Mandatory under GST Act, 2017)

Step 2: Obtain Necessary Licenses and Permissions

• Food Products: Approval from the Food Safety and Standards Authority of India (FSSAI)
• Agricultural Goods: Plant Quarantine Certificate (PQC)
• Pharmaceuticals: Clearance from the Drug Controller General of India (DCGI)

Step 3: Choose the Trade Route

Select the appropriate border checkpoint for goods movement. Major ICPs (Integrated Check Posts) include:

• Raxaul-Birgunj (Most commonly used route)
• Jogbani-Biratnagar
• Sunauli-Bhairahawa

Step 4: Documentation and Customs Filing

Submit the required documents to Indian Customs through the Electronic Data Interchange (EDI). Essential documents include:

• Authority Letter from an Authorized Customs Agent
• Delivery Order from Terminal Management Company
• Commercial Invoice
• Nepalese Customs Declaration
• Packing List
• Product-Specific Certificates (e.g., Phytosanitary Certificate, Food Safety Clearance, etc.)

Step 5: Engage a Customs House Agent (CHA)

A CHA ensures:

• Proper documentation filing
• Coordination with Nepalese Customs Officials
• Clearance at Integrated Check Posts (ICPs)

Step 6: Transport and Delivery

• Goods are transported via road, rail, or air, depending on product type.
• Nepal-bound shipments must comply with transit regulations under SAFTA (South Asian Free Trade Area).

Step 7: Payment and Final Clearance

• Payments are generally settled in INR through banking channels.
• Under the in-bond process, payments in USD or other convertible currency are processed via Nepal Rastra Bank.
• Final customs clearance is obtained before goods are released to the Nepalese importer.

Detailed Documentation Process

Preparation and Assessment

• Prepare five copies of the Nepal Invoice.
• Goods are assessed under the Central Excise Tariff Act, and duty is recorded.
• Exporters must notify Central Excise authorities24 hours before dispatch.

Examination and Sealing

• Customs officers verify and seal consignments before dispatch.
• Goods under duty exemption schemes undergo additional scrutiny.

Distribution of Nepal Invoice Copies

• First Copy – Retained by the exporter with sealed goods.
• Second and Third Copies – Submitted at the land customs station.
• Fourth Copy – Retained by the Central Excise Officer.

Procedure at the Land Customs Station

• Goods are presented to Indian Customs with invoices.
• Officers verify and certify exports before allowing entry into Nepal.
• Certified invoices are forwarded to Nepalese Customs for further clearance.

Nepalese Customs Verification

• Nepalese customs officers verify goods and invoices.
• Certified duplicate copies are sent back to Indian authorities for record-keeping.

Role of Directorate General of Inspection (Nepal Refund Wing)

• Maintains records for each land customs post.
• Calculates the total rebate for the Nepal Government.
• Verifies duty payments and reconciles discrepancies.
• Prepares and submits the final rebate statement to Nepalese authorities.