Nepal and India agree to review trade treaty — Kathmandu Post
Nepal and India have agreed to review their bilateral trade treaty to address non-tariff barriers and Nepal's significant trade deficit with India. The way for the treaty review was opened by a meeting of the Nepal-India Intergovernmental Sub-Committee on Trade, Transit and Cooperation to Control Unauthorised Trade, held in New Delhi on September 16–17, Kathmandu Post reports.
Under the agreement, the sides are to convene a technical committee within six months. It will assess the scope of the current treaty and identify issues requiring changes in light of current global trade conditions.
Barriers to Nepalese exports
The treaty is to be reviewed every seven years, but over the past 17 years it has mostly been automatically extended without significant changes — in 2016 and 2023. The document provides for another automatic seven-year extension unless either side gives three months' notice of its intention to terminate it.
Experts point out that Nepalese exports to India are constrained by sanitary and phytosanitary requirements, technical barriers, complex procedures and high trade costs. Former commerce secretary Purushottam Ojha stressed the need to simplify documentation procedures, digitise trade, harmonise customs and border procedures, and resolve issues related to certificate accreditation.
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The current treaty provides duty-free and quota-free access for Nepalese goods to the Indian market, provided rules of origin are met. At the same time, quantitative restrictions apply to vegetable ghee, acrylic yarn, copper products and zinc oxide. Nepalese jute products have been subject to anti-dumping duties in India for almost a decade, although Nepalese producers deny selling their products at dumping prices.
Deficit and agricultural imports
India is Nepal's largest trading partner, accounting for more than 60% of the country's total trade. In the 2025–2026 fiscal year, bilateral merchandise trade exceeded 1.46 trillion Nepalese rupees. Nepal imported goods worth 1.21 trillion rupees from India and exported goods worth 258.65 billion rupees, resulting in a deficit of 951.95 billion rupees.
Experts link the imbalance, in particular, to imports of cheaper Indian agricultural products, with which Nepalese farmers cannot compete in terms of production costs. They propose excluding certain agricultural products from the mutual duty-free access regime, including cereals, rice, pulses, flour, livestock products, poultry, fish, honey and milk.
Refined soybean, palm and sunflower oil accounted for 57.59% of all Nepalese exports in the 2025–2026 fiscal year, or 148.96 billion rupees. Experts note that dependence on several commodity items calls the sustainability of export growth into question. The Nepalese side also plans to raise issues of trade in services, bilateral investment, paperless processing and cybersecurity during the treaty review.
