The southern neighbor pushed for changes in duty structure, arguing that third country imports like betel nuts, in which it has imposed high customs duty, were finding their way to its market due to huge duty difference.[break]
India has been levying 108 percent customs duty on betel nuts imported from third countries. Nepal has fixed the duty on betel nuts at 20 percent.
Toya Narayan Gyawali, joint secretary at the Ministry of Commerce and Supplies (MoCS), who led the Nepali team during trade talks held in New Delhi last week, said that India officials raised grave concerns over sharp jump in betel nut imports to Nepal in recent years.
Nepal´s betel nut imports shot up sharply to over Rs 4 billion during the fiscal year 2009/10.
Apart from illicit movement of third country goods, India also raised concerns over circulation of fake currencies and movement of stolen goods across the border.
During the talks, Nepal raised concern over illicit entry of gold into Nepal through porous border.
Although Nepal and India have been blaming each other for not doing enough to check illicit cross-border trade, officials concerned admit that unauthorized movement of goods across the border has increased in recent years.
According to conservative estimate, unauthorized trade between Nepal and India stand at as high as one-third of the formal trade. If the estimate is anything to go by, unauthorized trade between the two countries is worth as high as Rs 85 billion.
“We have assured the Indian side that we will take all possible steps to check unauthorized cross-border trade," Gyawali told Republica.
The Nepali officials also sought similar assurance from their Indian counterparts.
The two countries currently have a joint mechanism of customs and local administration officials to monitor cross border trade, particularly informal trade. However, the mechanism has been failing to address the concerns of both the countries.
"Illicit trade is a matter of concern for both the countries, but it has proved costlier for Nepal in recent years. This has led to heavy growth in demand for Indian currency, spurring growth of informal currency market," said an official at Ministry of Finance.
Given the situation, the official said there is no alternative for both the state machineries but to work together to fight the problem.
During the talks, the Indian side also proposed Nepal to develop a mechanism for sharing information to control the movement of stolen vehicles and return the stolen vehicles to rightful owners.
As per the existing practice, Nepali customs auctions off stolen vehicles within 15 days of their seizure by the police.
India also requested Nepal to allow use of second-hand vehicles and heavy equipment in projects being commissioned under Indian assistance. Nepali officials said they were positive about using second-hand Indian heavy equipment for such projects.
Responding to Nepal´s request, India has agreed to facilitate Nepal´s trade with Bangladesh by simplifying the movement of goods along its territory. New Delhi has also agreed to handover the responsibility of finalizing the issue of accreditation of standard certification for Nepali goods to National Accreditation Board for Testing and Calibration Laboratories (NABL).
"With this agreement, India would authorize NABL to deal with the accreditation issues that were being handled by the Indian government so far," he added.
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