The Hindu : Front Page : India and Nepal decide to step up economic relations

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Thursday, Sep 18, 2008
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India and Nepal decide to step up economic relations

Sandeep Dikshit

New Delhi to promote industrialisation in Kathmandu

Two countries will undertake mega projects, including infrastructure development
India agrees to lift export curbs on several commodities

— Photo: V. Sreenivasa Murthy

Nepalese Prime Minister Pushpa Kamal Dahal (right) with the former Chairman of CII, Karnataka, N. Reguraj at a meeting in Bangalore on Wednesday.

NEW DELHI: India and Nepal have decided to step up economic ties. A joint statement by Prime Ministers Manmohan Singh and Pushpa Kamal Dahal (Prachanda) says the two countries will undertake mega projects, including for infrastructure development.

Nepal will provide a conducive environment for Indian business, which has complained of security issues and labour problems.

India, on its part, will seek to reverse the erosion of gains to Nepal under the 1991 trade treaty. It will undertake a comprehensive review of the existing trade and transit arrangements with a view to promoting industrialisation in Nepal, expanding complementarities of bilateral trade on a sustainable basis and removing the barriers to trade.

On an immediate basis, India has agreed to lift export curbs on several commodities to help Nepal cope with shortages in rice, wheat, maize, rice, sugar and sucrose.

India will provide a credit of up to Rs. 150 crore for the next three months to ensure uninterrupted petroleum supplies to Nepal.

Water management

On water management, an issue that has occasionally affected bilateral ties, the joint statement promised a wide array of measures. Both sides decided to launch relief and rehabilitation measures for the victims, and to reconstruct infrastructure damaged by the breach in the Kosi.

They also resolved to take preventive measures to avoid the recurrence of such events in the long-term.

The statement mentioned specific projects, in which initiatives will be taken through a more effective bilateral mechanism consisting of three tiers. These include preventive measures for the Gandak and other barrages under the existing bilateral arrangements, addressing inundation in the border areas and necessary work for its effective prevention.

In a gesture of goodwill, India has agreed to implement the Naumure hydroelectric project on the Rapti.

Set timelines

The Prime Ministers set timelines for reactivation of the bilateral mechanism in the areas of water resources and trade and commerce but not for Home and Foreign Secretary-level meetings. The Water Resources Secretaries will meet in two weeks to discuss hydro power generation, irrigation, flood control and related cooperation.

The Commerce Secretary-level inter-governmental committee will meet in one month to address trade-related issues.

Fresh look at treaty

While it was agreed to take a fresh look at the 1950 Indo-Nepal Treaty on Peace and Friendship, no timeline has been set for the meeting between the Foreign Secretaries.

Both sides agreed to enhance cooperation in handling cross-border crime and security concerns with the Home Secretaries meeting “soon” to implement this decision, according to the statement.

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