The Deputy Prime Minister, Mr. Morarji Desai this afternoon [Oct. 23, Kathmandu] had an hour’s meeting with King Mahendra of Nepal. For the first half an hour there was no one from either side. Later the Indian Ambassador in Nepal, Mr. Sriman Narayan and other officials joined them. Official sources of both sides are tight-lipped on what transpired during the exclusive talks between the King and the Deputy Premier. It is however speculated that the King informed Mr. Morarji about the line of talks he will have in Washington during his State visit which commences from next week. It is strongly believed that Nepal would ask for more defence aid from the United States. The officials of both sides had discussions on the economic matters relating to both the countries. The Indian side was led by Mr. T.P. Singh, Secretary, Expenditure, Ministry of Finance. The discussions were of a general nature. It is believed that Nepal showed eagerness that India give a categorical assurance about the proposed Karnali power project. Nepal wants India to construct it, purchase bulk power from the project and also advance loans for the project. It is believed that Nepal had submitted a project report which is still being studied in New Delhi. Indian officials said neither yes nor no to the Nepalese offer. Since the entire project will cost a substantial sum, India likes to consider every relevant aspect very thoroughly. The Indian side also mentioned Nepal’s levying of heavy duties on the Indian goods coming to Nepal. It is curious that though under the 1960 trade agreement both the countries agreed to give favoured nation treatment to each other, there is discrimination against Indian goods coming to Nepal, which are subjected to heavier duties compared to similar goods from other countries. Nepal claims that since over 90 per cent of the external trade of Nepal is conducted with India, it had no other option than to levy heavier duties on Indian goods to enhance its revenue. But the Indian side pointed out that this was an unilateral interpretation by Nepal of the 1960 trade agreement.
