'Nepal has underutilized trade opportunities with India'

Despite enjoying zero tariff entry facility on most of the goods to India, which has a huge market potential, Nepal has largely underutilized the opportunities it holds in penetrating market and expanding exports to the next-door neighbor in the south, shows a latest report.

For instance, the total import demand for iron and steel in India in 2010 was close to $8 billion.

But Nepal´s share of that was only 1.22 percent. Similarly, Nepal´s share of exports in India´s total imports of other exportable items on which Nepal has comparative advantage, including edible vegetables, copper articles, edible fruits and nuts among others, is below 2 percent.

According to the report unveiled in Kathmandu on Friday, the reason behind low exploitation of available market potential in India is due to supply side constraints such as infrastructure, human capital, access to finance and technology, and labor issues. Touching upon the debate over the pegged exchange rate with India, the report notes that there is no decisive evidence to change the peg despite real exchange rate appearing to be revalued.

"Devaluation is helpful if constraints like weak economic fundamentals, institutional and political fluidity and weak industrial and tradable sector is taken care of," reads the report.

The report that is totally focused on Nepal-India trade has outlined that Nepal has a highest degree of trade intensity with India after Bhutan. "Nepal´s export basket is heavy with low-value products like ferrous metals, chemicals, crops and food products," states the report. The report prepared by South Asia Watch on Trade, Environment and Economics (SAWTEE) with the help of United States Agency for International Development (USAID) argues that Nepal has not been diversifying its production to increase the volume of export.

According to the report, the non-tariff barriers that are hindering Nepal´s export to India are quarantine related issues, rules of origin, transport hassles, technical barriers to trade, quantitative restriction, domestic production and transit state permit. "Quarantine related issues have 39 percent of share in obstructing export to India," reads the report.

Moreover, the report argues that Nepal should ratify the Special Economic Zone bill as soon as possible. "There are issues that should be addressed in domestic level and by India as well," the report states, adding: "The Inter-governmental Committee meeting between Nepal and India should address the issues like transporters´ accessibility and transit issues."

The report also argues that the article III of Treaty on Control of Unauthorized Trade between Nepal and India should be reviewed and it should be open for the items that are imported for use in agriculture, manufacturing and service sector.

66-km network, 5 lines, 31 stations

KATHMANDU VALLEY METRO INCEPTION REPORT

The preliminary inception report on the much-awaited Metro Railway in Kathmandu that was submitted to the Department of Railways (DoR) by consulting companies this week has outlined five lines for the network -- four inside the Ring Road and one that will travel along the Ring Road.

The proposed 66.1-km network comprises 31 stations in total -- including transfer and ordinary stations. The main terminal of the metro will be located at Ratnapark, says the report, which is yet to be approved by DoR.

According to the report, the 27.35-km Line 1--which follows the Ring Road--will connect different locations between Kalanki, Satdobato, Chabhil and back to Kalanki.

The Line comprises 18 stations including transfer points at Kalanki, Balkhu, Satdobato, Koteshore, Tinkune, Sinamangal, Chabhil, Narayan Gopal Chowk and Gongabu, from where passengers can change trains. Line 1 will have pick-up and drop stations at Ekantakuna, Dhobighat, Sitapaila Chowk, Swoyabhu, Balaju, Machhapokhari, Tilangatar, Dhumbarahi and Gwarko.

Those who want to go from Kalanki to Sinamangal can take trains on Line 2. This Line will have six stations in places ranging from Kalanki and Sanogaucharan to Sinamangal. The Line will pass through the main terminal.

The preliminary report shows that Line 3 will link Koteshwore and Gongabu. It will have eight stations in places like New Baneshwore, Singha Durbar and Thamel and will pass through the main terminal.

Similarly, Line 4, which is 11.5-km long, will connect Satdobato and Narayan Gopal Chwok, while Line 5 -- the shortest at 8.4 kilometers -- will link Balkhu and Chabhil.

According to Rajeshwar Man Singh, superintendent engineer at DoR, the Metro Railway will travel above ground in some places, underground in some areas and on the surface in selected places.

“But how it travels in each specific area will be decided after the complete feasibility report is prepared,” Singh said.

DoR has given the consulting companies until November to prepare the complete feasibility report.

The feasibility report of the project -- which will be based on the preliminary inception report -- will be prepared by Korea Transport Institution, Chungsuk Engineering Company, Kunwa Cunsulting and Engineering Company, Korea Rail Network Authority and two local companies-- BDAnepal Private Limited and ERMC Private Limited. These companies were also involved in preparation of the preliminary inception report.

“We have paid around Rs 60.5 million (to the companies) to prepare the preliminary report and conduct the feasibility study,” Singh said.