Kathmandu, Oct. 16: Minister for Foreign Affairs Shisir Khanal has said that the next chapter of Nepal-India economic relations should be defined by ambition matched with execution.
"Our progress should ultimately be visible in tangible outcomes: investments realised, barriers removed, enterprises expanded, technologies shared, value chains strengthened and opportunities created," he said while speaking at the 32nd Annual General Meeting of the Nepal-India Chamber of Commerce and Industry (NICCI) held in Kathmandu on Thursday. He urged to capitalise the bilateral relationship to forge an economic partnership that is increasingly productive, innovative and resilient, one that connects capital with opportunity, technology with talent, and connectivity with enterprise.
Stating that India remains a major trade partner, source of investment, a key transit partner, and an increasingly important market for Nepal's electricity, FM Khanal said the task now is to make this relationship increasingly productive, diversified, and capable of generating greater value.
"For Nepal this means expanding productive capacity, creating jobs, attracting quality investment, diversifying exports, and connecting Nepali enterprises with regional value chains," he said while adding that Indian joint ventures and multinational companies have already made an important contribution to the economy, and encouraging the existing and prospective investors to expand their engagement in Nepal.
According to him, economic relationships depend on confidence and continuity. Every joint venture, business partnership, and professional network creates stakeholders invested in the prosperity of both the nations.
FM Khanal proposed five major areas of immediate cooperation – facilitation and connectivity, investment and industrial cooperation, energy cooperation, digital transformation and emerging technologies, and tourism.
He said that efficient border infrastructure, supply chain integration, predictable customs procedures, integrated checkpoints, logistics networks, and reliable transport corridors are essential to lowering the cost of doing business.
"We, at this point, need to move away from open border and closed sky," he said. He also stated that Nepal's economic transformation requires productive capital that expands domestic capacity, generates employment, and facilitates technology and knowledge transfer.
Maintaining that the cross-border electricity trade has opened an important new chapter in Nepal-India economic relationships, FM Khanal said Nepal's hydropower potential, combined with India's expanding energy market, provides the foundation for deeper investment, stronger transmission infrastructure, and wider regional energy integration.
'Take non-tariff barriers seriously'
Professor Amitabh Mattoo, Dean of School of International Studies at the Jawaharlal Nehru University, said that India must take Nepal's concerns about non-tariff barriers seriously.
"India has right and responsibility to enforce health, safety, and quality standards, but regulation should be transparent, proportionate, and predictable so that a consignment of Nepali ginger or tea is not stranded because of a requirement that an exporter could not reasonably have anticipated," he said.
However, he said that the export of the goods like soyabean oil has also raised legitimate questions about the rules of origin, tariff arbitrage, and domestic value addition.
According to him, sustainable growth must increasingly come from sectors in which Nepal creates genuine value and there are so many: agro-processing, tea, cardamom, specialised foods, light manufacturing, clean energy industries, tourism, and IT and digital services.
Prof. Mattoo, a Padma Shri awardee, suggested measures like mutual recognition of accredited testing, risk-based rather than blanket inspection, digital certificates of origin, and consultation before any major bilateral consequences in order to have seamless trade relations between Nepal and India.
Stating that some in Nepal will say deeper integration means deeper dependence, he said that badly-designed connectivity creates dependence while well-designed connectivity creates choice.
"When Nepal's electricity can reach Bangladesh through India, when Nepali goods can use multiple Indian transport routes and ports, and when Nepali entrepreneurs can access Indian capital and then reach global markets, connectivity enlarges Nepal's agency rather than shrinking it," he said.
Prof. Mattoo said that while some others would say that large Indian firms are over Nepali enterprise, the answer lies in design - fair competition, local supplier development, skills transfer, strong regulation, and joint ventures where they make economic sense.
"We must turn infrastructure into corridors. A road on which a truck waits for hours, or paperwork, is yet not an economic corridor. A railway disconnected from warehousing and efficient customs is not yet a logistics system. A border post without interoperable digital documentation is only partly modern," said Prof. Mattoo.
Indian growth offers demand for Nepal
Former Ambassador of Nepal to India Dr. Shankar Sharma said that India's growth offers demand and resources for Nepal and the latter must build the capacity to respond.
"Open markets, competitive production, regional energy trade, and effective implementation can make shared prosperity a durable foundation for the relationship," he said.
Dr. Rakesh Pandey, Charge d'Affaires at the Embassy of India in Kathmandu, said that while maintaining deeper integration in existing trade and economic cooperation, interaction should be enhanced in areas like technology, AI, startups, renewable energy, IT, connectivity, and many others.
Address challenges at border
Speaking on the occasion, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Anjan Shrestha said that the challenges faced by businesses in cross-border trade should be addressed first as suggested by the Nepal-India Joint Business Forum. "Simplifying customs procedures, improving border infrastructure, reducing delays, strengthening transport connectivity and ensuring predictable trade policies will lower costs for businesses and consumers in both countries," he said.
He also said that better coordination between the Bureau of Indian Standards (BIS) and Nepal Standards (NS) is required for certifying products such as steel, footwear, and plywood. "Currently, non-compliance
issues with BIS standards are adversely affecting Nepali exports. The certification process is overly time-consuming, often taking six months to a year to complete. By the time certification is granted, the renewal period is already due, which has heavily discouraged local entrepreneurs," stated Shrestha.
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