Nepal and India have signed a Letter of Exchange (LoE) for the 2004 India-Nepal Rail Services Agreement (RSA). On 9 July 2021, the two governments held a virtual ceremony to exchange Notes Verbales and signed copies of the LoE.
The ceremony was presided over by Sanjay Kumar Mohanty, Member (Operations and Business Development), Ministry of Railways. Dinesh Bhattarai, Secretary, Ministry of Commerce, Industry, and Supplies, led the Nepalese delegation.
The ceremony was held in the presence of Ambassador of India to Nepal Vinay Mohan Kwatra, Ambassador of Nepal to India Nilamber Acharya, Joint Secretary (North), Ministry of External Affairs of India Anurag Srivastava, and Joint Secretary (South Asia), Ministry of Foreign Affairs of Nepal Tirtha Raj Wagle, according to a press release issued by The Embassy of India Kathmandu. Representatives from the two embassies as well as relevant Ministries from both governments were also present.
With the enactment of the LoE, all authorized cargo train operators, including public and private container train operators, automobile freight train operators, special freight train operators, and any other operator authorized by Indian Railways, will be able to use the Indian railway network to carry Nepal’s container and other freight – both bilaterally between India and Nepal.
This liberalization will allow market forces to emerge in Nepal’s rail freight segment, increasing efficiency and cost-competitiveness, ultimately benefiting Nepalese traders, transporters, and consumers.
Furthermore, as a result of this LoE, all types of cargo in all categories of wagons that can carry freight on the Indian Railways network within India can now also carry freight to and from Nepal.
The liberalization will primarily lower transportation costs for automobiles and other products transported in special wagons. Wagons owned by Nepal Railway Company will also be permitted to transport Nepal-bound freight (inbound and outbound on the Kolkata/Haldia to Biratnagar/Birgunj routes) on the Indian Railways network in accordance with IR standards and procedures.
The LoE also updates several other sections of the India-Nepal RSA to reflect the most recent operational and infrastructure status of the Indian and Nepalese railways. As a result, it represents yet another milestone in India’s efforts to improve regional connectivity under the “Neighborhood First” policy.