The Railway Service Agreement between the two neighboring countries was recently amended to strengthen Nepal-India bilateral relations. According to the revised text of the Letter of Exchange, all official private container train operators (Indian and Nepali) will be able to use the Indian Railways network to transport carriers for import or export to Nepal, effectively ending the Government of India’s monopoly on Container Corporation of India.
A cursory review of history reveals that the railway agreement was signed in 2004 and that both parties have attempted to amend it several times. Because both countries intend to expand and expand cross-border rail services for both passenger and cargo facilities, it was imperative that the agreement be amended as soon as possible.
The recent amendment to Nepal’s 17-year Railway Service Agreement (RSA) has removed long-standing barriers, particularly in resolving problems in the import and export of goods via Indian railway services.
This liberalization will assist Nepal in entering the rail container freight segment, and it is likely that transportation costs will be reduced in the medium term, benefiting consumers. The new agreement will be put into effect with the approval of the two cabinets.
The agreement also allows Indian railway freight services to transport goods to and from border points other than Raxaul / Birgunj. The agreement expands existing cargo traffic and facilities from various Indian ports to industrial areas bordering Nepal.
Experts and officials who have been planning to expand Nepal-India cross-border railway networks said the agreement has also opened up a new relationship of cooperation in the Nepal-India trade and transit sectors.
After ten years, the current railway agreement will be amended again. The agreement appears to make trade and imports of goods imported by Nepali industries easier. The amendment includes a number of provisions concerning the use of Indian rail services for trade with third countries, as well as the regulation of rail transport in bilateral trade with India. Private railway service providers in India will now be able to transport passengers by rail to Nepal. Similarly, all licensed cargo train operators in India that provide rail services will be able to provide transit services to Nepal.
For targeted transportation to Nepal, all types of containers and wagons licensed for operation in India may be used. Similarly, locomotives put into service by private service providers will be aimed at Nepal.
Similarly, the railway service agreement has been amended so that Nepal Railway Company trains and wagons can provide train service from Birgunj and Biratnagar to Kolkata and Haldia for transit cargo to Nepal.
The infrastructure for a railway service to Birgunj in Nepal is currently being built. Once the railway infrastructure is completed, the railway service will be extended to Biratnagar, Bhairahawa, and Inaruwa, as well as other transit and bilateral trade points along the Nepal-India border.
Previously, railway service charges for import and export to Nepal had to be paid in advance in Kolkata; however, an arrangement has been made to pay directly through Nepali Commercial Bank. The amendment is intended to strengthen trade and transit ties between the two countries.
It was also agreed that the railway service would be expanded based on agreements reached at other transit points along the Nepal-India border and at bilateral trade ports. Nepal currently lacks its own freight train and wagon. As a result, for the time being, private railway service providers and train operators in India can provide transit services to Nepal. The amendment to the railway service agreement has been welcomed by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), an umbrella organization of the private sector, the confederation of NEpalseIndustries, and the Nepal Chamber of Commerce (NCC). These organizations have also asked the governments of both countries to follow through on the revised agreement. As a result, the big question now is how to put it into action. The transit agreement signed with China in 2016 demonstrates that the agreement alone will not suffice.
The private sector has issued a statement expressing its appreciation for the amendment to the Nepal-India Railway Agreement. The private sector applauded the railway agreement amendment, claiming that trade and transit relations between the two countries would reach new heights.
Trains and trains owned by the Nepal Railway Company will be able to provide train services from Birgunj and Biratnagar to Kolkata-Haldia for the purpose of transporting transit cargo to Nepal, according to the revised agreement. The existing railway service in Birgunj, Nepal, will be easier to trade with third countries once the railway infrastructure in Biratnagar, Bhairahawa, and Inaruwa is completed.
They were also pleased with the amendment to the Nepal-India Railway Agreement. Despite the fact that the agreement will greatly benefit Nepal’s foreign trade, the high cost of transportation will have an impact on Nepal’s foreign trade. This will lower Nepal’s business costs by making Nepali goods more competitive, and it is expected to make goods transportation easier.
The Minister for Physical Infrastructure and Transport stated at the “Maritime India Summit 2021” that the government has begun the process of launching water transport on the country’s largest river.
A study is being carried out to investigate the feasibility of operating water transport on the Karnali, Narayani, Kaligandaki, and Koshi rivers and connecting them to India by water. For a long time, Nepal has attempted to operate water transport. The three-day “Maritime India Summit” was held in Mumbai.
Because Nepal is a landlocked country, Asian countries can assist Nepal in overcoming the challenges seen in its geographical and economic problems. Nepal’s trade with India is significant in South Asian countries. Because the country has a thousand-kilometer-long open border. As a result, for any trade policy to be successful, it must address and integrate the Indian market.
Nepal’s geographical reality is that it is not only landlocked, but it is also landlocked in such a dilapidated manner that it is unlikely to rely on countries other than India for transit. Although Bangladesh has permitted the use of the Mongla port via the Phulwari-Bangalaband route, the route has not proven to be economically viable in terms of infrastructure and cost. There is even a requirement to visit Indian territory.
For the time being, the Chinese transit route is completely impractical for Nepal because India is the most important transit country for Nepal in terms of distance and economic movement of all commercial traffic. Although China has signed a number of transit protocols, only time will tell how useful and practical they will be.
Nepal and India signed the RAS during the cursory review in 2004. It was repeatedly demanded through a detailed evaluation of the agreement, two meetings in 2009 and 2012 – the signing of the agreement produced no meaningful results. Nepal is demanding the expansion of rail services to all trading points across the country due to an increase in trade and transit with other countries. Rail transport from Kolkata to Birgunj was only included in the 2004 RAS.
The nature and volume of trade have changed dramatically in the 17 years since the agreement, necessitating a timely evaluation of the agreement. There is a need for the current agreement to expand container and bulk cargo services, as well as ways to use the Janakpur-Jainagar railway for transit and railway links (meters and broad gauge).
Nepal will need to implement an Electronic Cargo Tracking System (ECTS), as well as make the best use of Vizag port and demand Dhamra port for future transit transport. The following key issues must be addressed for the effective operation of the Vizag port for Nepal: there was no transparency and no tracking / tracing system for containers to be moved from Vizag port to ICD Birgunj. Nepali merchants must rely on the CAA / shipping line for accurate information, which is not always provided on time. Due to the absence of the Nepal Consulate General at Vizag Port, the documents are sent from the new National Embassy to Vizag Customs via Nepal Rastra Bank “to proceed.” The entire procedure is time-consuming and inconvenient.
If the transit time from the load port to the destination port exceeds the transit time, the agreement is expected to address the business community’s concerns about the newly arrived agency’s monopoly in ICD.