India-Nepal Trade up 36%, more hydro projects on cards

Nepal Trade Minister Anil Kumar Jha meeting the Union Minister for Commerce & Industry and Textiles, Anand Sharma, in New Delhi on October 22, 2011.

Bilateral trade between India and Nepal has increased from $ 1.9 billion in 2009-10 to $ 2.7 billion in 2010-11 registering an increase of around 36 percent. Exports from Nepal to India have also grown from $ 452 million in 2009-10 to $ 476 million in 2010-11, registering an increase of around 5.3 percent.

During his meeting with his Nepalese counterpart Anil Kumar Jha, Anand Sharma has 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.

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.82,000 crores (Rs. 820 billion). “It is important that the projects are started as early as possible” 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.

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 provided direct employment to around 30,000 Nepali citizens and indirect employment to more than twice that number, said a statement. Both governments have finalized the bilateral investment protection and promotion agreement.

Sharma stressed that problems faced by Indian Business in Nepal. He pointed out that Surya 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, he added..

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