Press Information Bureau

Government of India

Ministry of Commerce & Industry

22-October-2011 19:37 IST

The Union Minister of Commerce, Industry and Textiles, Shri Anand Sharma has expressed satisfaction that bilateral trade between India and Nepal has increased from US$ 1985 mn in 2009-10 to around US$ 2700 in 2010-11 registering an increase of around 36%. Exports from Nepal to India have also grown from US$ 452mn in 2009-10 to US$ 476mn in 2010-11 (an increase of around 5.3%). During his meeting with his Nepalese counterpart Shri Mr. Anil Kumar Jha, here today, Shri Sharma singled out hydro power sector for increased cooperation between the two countries. “It is estimated that sale of electricity from the 40,000 MW hydropower potential of Nepal can generate revenues of more than 10 billion US$ per annum. Nepal could also attract a lot of investment in manufacturing/services sector by overcoming its present power shortage” Said the Indian Minister.

Shri Sharma noted that in the recent past, several Indian private companies/Joint ventures have been able to secure survey licences for development of about 8,200 MW hydro power projects in Nepal at an estimated cost of Rs.82000 crores. “It is important that the projects are started as early as possible” Shri Sharma said. Indian Minister also pointed out the problem of local disturbances for the Indian Investors.

The Minister also informed that the Government of India has accepted the Nepalese request for use of Vishakhapatnam port and rail route through Singhabad (India) --- Rohanpur (Bangladesh). Approval of Government of Nepal for the Letter of Exchange (LOE) sent in this regard is awaited. Nepal’s request for further facilitation of Nepal- Bangladesh trade through Kakarbhitta-Phulbari-Banglabandha route had also been agreed.

The meeting also explored India providing Buyers Credit to Nepalese Government agencies for large project exports, especially in the infrastructure sector such as roads, bridges, railways, power lines, sewerage plants, water treatment plants and housing from India. The credit can be provided under National Export Insurance Account (NEIA) through EXIM Bank for a maximum period of 5 -8 years.

Indian firms are the biggest investors in Nepal accounting for about 47.5% of total approved foreign direct investments. There are about 150 operating Indian ventures in Nepal engaged in manufacturing, services (banking, insurance, dry port, education and telecom), power sector and tourism industries. Indian joint ventures in Nepal have contributed significantly to increase in Nepal’s exports to India. They also provide direct employment to around 30,000 Nepali citizens and indirect employment to more than twice that number. Both Governments have finalized the bilateral investment protection and promotion agreement. Shri Sharma stressed that problems faced by Indian Business in Nepal. He pointed out thatSurya Nepal, a subsidiary of ITC Limited, India had to shut down permanently its readymade garment production because of long running labour problems. He also touched upon the problems faced by GMR group. Such incidences will, over a period of time, have a negative effect, Shri Sharma added..

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Hydropower cooperation can unlock cross-border investment and infrastructure financing, enabling broader trade and energy collaboration. The statement stresses accelerated hydropower cooperation-including survey licences for approximately 8,200 MW of projects-and warns that local disturbances and labour disputes threaten Indian investment. It records agreed trade facilitation via port and rail transit pending a Letter of Exchange, outlines availability of buyers credit for infrastructure exports under the National Export Insurance Account through EXIM Bank for medium-term tenors, and notes finalisation of a bilateral investment protection and promotion agreement alongside India's major private investment presence and employment contributions in Nepal.