India, Nepal seek to ease trade, transit bottlenecks as commerce recovers

India and Nepal are working to reduce trade and transit obstacles as their bilateral merchandise trade has been recovering since the end of a two-year decline in fiscal year 2024 (FY24), according to India's commerce ministry. The two nations discussed market access, customs procedures, border infrastructure, and connectivity during a recent bilateral meeting, as reported by the ministry.

Bilateral merchandise trade between India and Nepal has been on a decline, falling from a peak of $11.02 billion in FY22 to $8.92 billion in FY23 and $7.87 billion in FY24 - a cumulative reduction of about 28.5%. However, it has since rebounded to $9.39 billion in FY26, as per the ministry's data shared with the Embassy of India in Kathmandu.

India exports goods worth $7.45 billion to Nepal, while Nepal exports goods worth $1.94 billion to India. India is Nepal's largest trading partner, accounting for around 62.3% of Nepal's total external trade.

The countries are discussing ways to enhance market access, customs procedures, border infrastructure, and connectivity to alleviate trade and transit bottlenecks. They plan to improve customs cooperation through pre-arrival information exchange, electronic verification of certificates of origin, and increased customs automation and digitalization. Ensuring legitimate trade and compliance with food safety and phytosanitary standards are also crucial, according to both nations.

The India-Nepal Inter-Governmental Sub-Committee on Trade, Transit and Cooperation to Control Unauthorised Trade, an institutional mechanism for addressing trade-related issues, recently met in New Delhi from September 16-17. The Indian delegation was led by Ujjwal Kumar Ghosh, joint secretary of the Department of Commerce, while the Nepalese delegation was headed by Buddha Bahadur Gurung, joint secretary of the Ministry of Industry, Commerce and Supplies.