Though India is expected to raise issues related to security, including extradition treaty and security of Indian investment in Nepal, officials involved with prime minister´s India visit said Nepal will mainly focus on trade, investment and developmental issues, seeking India´s support mainly for infrastructure development.[break]
“Among major issues, the prime minister will formally request India to raise the volume of development assistance it has been providing to Nepal,” said a highly-placed government source.
Currently, India´s development assistance to Nepal stands at about US$ 100 million. Though the volume is still significant when compared to aids from other bilateral donors, the government believes more assistance is needed to overcome infrastructural constraints and harness Nepal´s hydropower potentials.
The Nepali delegation will also sign an agreement with Exim Bank of India, accepting soft loans of US$ 250 million. The loans will be used for financing development of energy, irrigation and roads - the three areas that urgently needs fresh investments. “Specific projects that will use the loans will be identified and selected later,” said the source.
Nepal will remain silent on bilateral investment protection agreement that India has been pushing for since long. However, it is preparing to sign a new treaty on double taxation, which will exempt investors and traders from the need to pay taxes in both the countries in a bid to foster bilateral trade and investments.
The two sides had finalized the negotiations on the treaty about two years ago. If the prime minister signs the treaty during this visit, it will supercede similar Treaty on Avoidance of Double Taxation and the Prevention of Fiscal Evasion in Respect to Taxes on Income signed between two countries in 1987.
The treaty will free Indian investors from the need to pay taxes back home on repatriation of income once they pay taxes in Nepal. It offers similar facility to traders as well.
The treaty also strictly limits the double taxation avoidance facility to Nepali and Indian business establishments only.
“This will put Indian investors at advantage over third-country investors that have base in India and are investing in Nepal,” said the source, adding that such a provision has been worked out in a bid to lure more Indian investments.
India has been pushing for earliest signing of new treaty on avoidance of double taxation, arguing that it is one of the important tools for luring Indian investments and promoting businesses. Indian External Affairs Minister SM Krishna had made a case for this when he visited Nepal in April 2011.
Power import principal agenda of PM´s India visit
Importing additional 200 MW of electricity from India is going to be the principal agenda Prime Minister Baburam Bhattarai will take up during his upcoming visit to the southern neighbor.
"The prime minister has already consulted and held extensive discussions in this connection with experts who have told him that it is necessary and technically feasible to import additional 200 MW of energy from India," the prime minister´s personal secretary Ganga Shrestha told Republica.
He said the prime minister decided to give top priority to the matter of power import with a view to avert serious economic crisis that could result from acute power shortage in the country.
"The prime minister is convinced that we can´t have a brighter future with the country remaining in dark," said Shrestha. According to him, Bhattarai wants to address the impending crisis facing the industrial sector and businesses and the public in general in the winter.
The Nepal Electricity Authority (NEA) has had to enforce power cuts of up to 18 hrs a day during winters in the recent years.
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