Sunil KC is vice-president of the Nepal-India Chamber of Commerce & Industry (NICCI) formed in 1993 with the objective of promoting investment in Nepal by assisting Indian investors. The business body also takes up issues being faced by Nepali businessmen in India. The NICCI was a leading proponent in facilitating the Nepal-India Trade Treaty in 1996, providing inputs and organising discussions and interactions between officials of the two countries. Over the years, the NICCI has played the role of facilitator, negotiator and well-wisher of Nepal-India trade and economic ties.
KC shares his views on the current Nepal-India business relationship and future plans to strengthen their trade and business ties. Excerpts:
How do you see the relation between Nepal and India in the present context?
Nepal and India have been good neighbours for a long time. India is our largest trading partner, and two-thirds of Nepal’s international trade takes place with India. Nepal is also a vast and welcoming market for India. For Nepal, India is one of the largest sources of foreign direct investment. These strong ties are based on a deep-rooted socio-cultural bond between the two countries. In South Asia, almost all countries have highly secured borders with India. Unlike them, Nepal shares an open border with India, a unique feature reflecting the past and present of the two countries, and a gateway to people, language, culture, society and trade exchanges. Against this backdrop, the present ties define interconnectedness, trust, bonhomie and uniqueness.
Are there any initiations that you can recall that the NICCI has taken in recent times?
In recent years, the NICCI has been making policy recommendations, such as providing suggestions for the renewal of the Nepal-India Trade Treaty, Transit Treaty, Rail Service Agreement and International Property Rights, and suggestions for the operation of inland container depots and integrated check posts. In 2016, the NICCI initiated the formation of a joint working group bringing all three chambers—Federation of Nepalese Chambers of Commerce and Industry, Confederation of Nepalese Industries and Nepal Chamber of Commerce—in one place to discuss the renewal of the Nepal-India Trade Treaty.
The NICCI has also contributed immensely to getting the Rail Service Agreement ratified. It ensured that the agreement favoured Nepal’s trade and opened the door for other [private] railway companies to come to Nepal. It benefited Nepal as it minimised procedural hurdles and reduced transportation costs. We appreciate the recent amendment to the Rail Service Agreement, done after a long time, through a letter of exchange in June 2021, which was originally signed between the two countries on May 21, 2004.
Under the latest agreement, the trains and wagons under the ownership of Nepal Railway Company can provide services to Kolkata-Haldia from Birgunj and Biratnagar. It is expected to bring about a colossal change in Nepal’s international trade. With the amendment to the agreement, we believe it will improve the field of transit of Nepal for bilateral and third country trade, reducing costs and hassles of doing business in the future.
The NICCI has been getting the two countries to cooperate in the fertiliser sector. Recently, Nepal and India approved a memorandum of understanding to be signed for a five-year supply of chemical fertilisers to Nepal. The NICCI has also initiated a business team to take up power trading business with India to export power for Nepal’s trade. The NICCI is already working on expanding foreign direct investment in the existing and new areas like renewable energy, Ayurveda, IT, education and others.
In which sector in Nepal do you see more investments coming from India?
Nepal is graduating from least developed country to developing country by December 2026. I believe that it is still a land of opportunity where foreign investors can grab the best and most welcoming options available here, especially Indian investors. Nepal has immense hydropower potential but very little of its capacity has been explored. The sector has the best potential for foreign investment, but it needs intent and good policies. Similarly, there is scope in the tourism and hospitality industry. Since Nepal is in the process of building big hotels with many of them in the construction phase, there is a massive scope for international management chains to come and invest.
On the infrastructure front, Nepal plans to build and operate various inland container depots and integrated check posts in Biratnagar in the eastern part of the country and Dodhara Chandani in the western part. There is also a huge scope of foreign investment in the building and operation of these facilities.
Connectivity is another crucial area. Railways and waterways are the areas for investment where Nepal has less experience. In the transportation sector, a few automobile brands have started assembling their products in Nepal. It is also an area where foreign investment, especially Indian investors, have good opportunities to establish assembly plants. Besides, the healthcare and education sectors are key sectors to attract foreign investors, particularly from India. In agriculture, technical and financial collaboration for modern agro production, and testing and increasing production of high-value crops can be a potential area. I see immense scope for investment in Nepal’s varied sectors, but it requires the government’s initiation and favourable policies.
When we talk about globalisation and free market economy, intellectual property rights has become a pertinent issue for Nepal. How do you see this issue in Nepal’s context?
When we talk about foreign Investment, we should be aware of the challenges being faced by foreign investors in Nepal. Intellectual property is not physical, so it is an intelligent and intangible asset. One should know the value of the intellectual properties or intangible assets that foreign investors operating in Nepal feel are lacking. If we wish to be in sync with the global market and its demand and supply, there must be a well established law and regulation framework. There are laws, but there are no regulations or rules, and this could become a bottleneck for foreign direct investment to come to Nepal. We don’t have any standard operating procedures, which are very important. There are no rules, manuals and procedures in the case of patent, trademark and design; and no other laws related to geographical indication. The copyright act needs to be amended and integrated. Therefore, things need to be addressed. Nepal is a member of the Paris Convention and Bern Convention, but still faces problems. Nepal should get membership in several other international bodies for the ease of protecting intellectual property rights to attract foreign investment. The Madrid Convention allows the registration of a trademark at a single entry point. And you don’t need to go to different countries to register the trademark. We should look into such opportunities.
What are the future plans of the NICCI?
The NICCI had to cancel several planned programmes in early 2020 due to the Covid-19 pandemic. We have drafted a few strategic plans and programmes. They include the Nepal-India Partnership Summit, which will be an annual flagship event of the NICCI. The K2K (Kathmandu-Kolkata) Forum has been planned. As Kolkata is a significant customs point for Nepal’s trade with third countries, the K2K will focus discussions on issues related to Kolkata port and present recommendations to the authorities concerned. To establish a Nepal-India Innovation and Entrepreneurship Centre. This will be a new vehicle to promote and support start-ups in Nepal through Indian government assistance. We have planned to establish provincial chapters in all seven provinces of Nepal.
