Good Afternoon & Namaste !
UNESCAP
Regional Conference on Strengthening Transport
Connectivity and Trade Facilitation in South and
South-West Asia
Country Paper, Nepal
9-10 December, 2013
Lahore, Pakistan
Cross- Border and Transit Transport by Land
Background
 Nepal is surrounded by India in south, east and west
and Tibet, the Autonomous region of People's Republic
of China in the North and lacks the access of seaport.
 The absence of seaport deprives the competitive global
business.
 The sea freight is almost same to all countries. However,
the extra transit cost, sometimes, is exorbitantly high up
to 40% in Nepal’s case that inflates the price of both
imports and export.
 But, It has Opportunity to be Land Linked Country between India and China –Transport
 Hydro power provider to the region- Trade
 A regional hub for tourists- Again Transportation facility
Background
 Fundamental Transit Police Issues of Land Locked
Countries in South Asia
 South Asia’s three LLDCs—Afghanistan, Bhutan and
Nepal—are also least-developed countries (LDCs).
 Afghanistan depends on the ports Pakistan and Iran for
its overseas freight traffic.
 Both Nepal and Bhutan solely use Indian ports for their
overseas trade: Nepal uses Kolkata port and Haldiya port
and Bhutan uses Kolkata port.
 SSWA is probably the region having poorest intraregional transport connectivity in the globe.
Nepal's Trade Balance with Some South and SouthWest Asian Countries in 2011/12
(Rs. in thousand)
Country
Export
Import
Trade
Balance
Afghanistan
97,883.9
299.5
97,584.4
Bangladesh
2,578,079.8
1,502,817.4
1,075,262.4
Bhutan
543,836.2
249,411.5
294,424.6
India
50,933,222.3
321,346,418.6
-270,413,196.3
Pakistan
225,906.6
266,286.4
-40,379.8
Turkey
548,770.3
420,301.3
128,469.0
* Estimated
Sources: Nepal Rastra bank
Existing Legal basis for Cross- Border and
Transit Transport by Road
• Multilateral and Bilateral Trading Arrangements
• Bilateral Trade Agreement with 17 trading partners
 Nepal – India Transit Treaty, 2006
 Trade and Transit Treaty between Nepal and China Nepal Bangladesh Transit Treaty, 1976
 Transit right of LDC related UN conventions 1980, 1991 and 2001,
 Trade and Transit right as managed in Law of Sea 1958, 1982
 WTO, BIMSTEC,SAFTA (Nepal's bilateral Trade Agreement between 17
countries and Nepal's accession to the WTO, April, 2004)
 BIPPA agreement concluded with 10 countries including India
 Double Taxation Avoidance Agreement (TAA) with India
• SAARC Agreement on Mutual Administrative Assistance in Customs Matters
• GSP schemes for export to Belarus, Canada, EU, Japan, New Zealand, Norway,
Russian Federation, Switzerland,Turkey, and the United States
Main Corridors for Cross-Border Transport by
Road
Existing Legal Basis for Cross- Border and
Transit Transport by Road
• Agreed Routes for Mutual Trade
• India-Nepal: 27 Bilateral trading points (Treaty of
Trade)
• China-Nepal: 3 international and 3 bilateral trade
point
• Transit Route India and Bangladesh
• Kolkota/Haldia Sea Port for 3rd country trade
connecting with 15 Nepal-India Routes
• Phulbari-Banglabandh Transit to Bangladesh
Cross-Border Trading Points
China
Roads along South to North sidesRaxaul(India)- Birgunj (Nepal)- HetaundaNarayanghat- Kathmandu- Tatopani (China
Border) AH42
Kathmandu- Galchhi- Rasuwagadhi- Kerung
(Track Opened)
NEPAL
Bhutan
India
Mahendra highway-
1027 km from Kakarbhitta border to
Mahendranagar border (AH2)
Missing link at the west Mahendranagar (Nepal)Banabasa (India),
Poor conditioned road in East side Phoolbari
Bangladesh
27 Trade & Transport Links along the
border of Nepal and India
3 trade & Transport Links along the
border of Nepal and China
Major Challenges in Cross Border and Transit
Transport by Road
• Nepalese trade is mostly inclined with India and China;
• Dependence on transit providing country's; infrastructure, political
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relations, peace and stability, administrative practices;
Restricted choice of ports and routes ;
Cumbersome transit processes including procedural controls;
Hassles in the from of multiple checking agencies ;
Actual documentary requirements higher than those specified in
transit treaty ;
High insurance cost due to lack of competition ;
Transshipment;
Because the import and export trade is imbalanced, there is
significant empty back-haul that creates inefficiency
Major Challenges in Cross Border and Transit
Transport by Road
• The Banglabandha port was formally inaugurated in
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May 2004 but has not been fully functional owing to the
absence of a transit agreement for the use of Indian
territory as a transport route for Bangladeshi, Nepalese
and Bhutanese trade cargoes.
Nepali transport trucks are not allowed entry into
Bangladesh and must exchange their cargo at the "zero
point" of the Indo-Bangladesh border.
Strikes
High cost
Need to cross different checking and time consuming
Current Status of Cross-Border Operations for
Freight and Passengers by Rail
Railway transit route from Nepal to Kolkata
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SAARC Rail Routes (Bangladesh)
Jayangar in India to Janakpur 42 km old narrow gauge rail line which basically carries
the passenger traffic.
• The Raxaul of India and Birgunj ICD in Nepal, a stretch of 5.4 km for goods traffic.
Current Status of Cross-Border Operations for
Freight and Passengers by Rail
 Half the third-country imports transit in containers
by rail from Kolkata to Birgunj.
 The low tonne/TEU ratio suggests these goods are
high-value goods. The remaining 50% of third-county
goods travel to Nepal by road in containers or as
break-bulk.
 Approximately 5% of third-county containers
arriving by rail at Raxaul originate from Chittagong.
While there is a rail link from Chittagong to Dhaka
ICD, it is not possible to transit completely by rail to
Nepal (West, though Bangladesh and India) as the
Jamuna Bridge (near Saidabad, Bangladesh) cannot
support rail freight loading.
Current Status of Cross-Border Operations for
Freight and Passengers by Rail
 The defined corridor for bilateral rail movement is between Nepal
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and India is Single broad gauge line from Birgunj to Muzaffarpur (137km);
 Double track between that point and Varanasi (103km); and
thereafter;
 Electrified double line to Kolkata or other Indian destination
The distance from Kolkata to Birgunj is 704 km and between Haldia
and Birgunj, 832km.
The train path is controlled by Indian Railways and the container
haulage operation is Concor.
20, 000 TEU per annum arrive in Nepal and represents about 250
train movements to Nepal each year.
Indian Railways is required by agreement to unload the 80-90
containers on the rake in 8 to 12 hours and this is achieved using
modern reach stackers (there are no rail mounted gantry cranes)
Legal Arrangements for Cross Border Rail
Operations
 Nepal India Railway Service agreement in May
2004
 Need to review in every 5 year
 The existing railway agreement signed in 2004
allows limited movement of rail Cargo between
Birgunj ICD and Kolkata and Haldiya ports of
India.
Major Challenges in Cross-border rail Transport
• There are a number of time hindrances to the rail transit of goods that include:
• the need for aggregation of goods at the port of departure or the de-stuffing
and aggregation of containers at the port of arrival;
• the need to fill each train rake before it can depart; and
• the need to agree train paths between existing train services.
• as the shipping lines only conventionally provide 14 days free time for the use
of containers from ship discharge to return to port, the extended transit times
can result in significant demurrage charges that add significantly to overall
cost.
• the consequence of these hindrances is that for cost reasons, or because cargo
is time-critical cargo, goods are transferred from the port by road.
• Lack of timely amendment of Rail treaty with India
• Need to extend railway link in Kakrabitta, Biratnagar, Nepalganj and Bhairawa
Customs
• Infrastructure development for railway connectivity
Transport Facilitation Measures
Transport Facilitation Measures
 The ability of existing transport and logistics infrastructure
within Nepal and the key transit corridors to efficiently and
effectively handle the varied types and volumes of products
also needs to be taken into account. This extends across the strategic and local road network within Nepal,
 in-country warehousing and parking needs,
 airports, and border post facilities.
 External infrastructure includes road and rail transit
corridors, together with their integration with gateway
port systems in India and Bangladesh.
 Onward shipping or air freight services providing the
extended connectivity from the gateway ports and airport
to international transit hubs.
Transport Facilitation Measures
Facilities at the Border
 At the border there are two distinct border facilities, these being 27
traditional border post located on the historic crossing points between India
and Nepal, and five Inland Clearance Depots (ICDs) at:
 Birgunj (rail only facility, India);
 Biratnagar (road, India);
 Bhairahawa (road, India);
 Kakadbhitta (road, India); and
 Tatopani (road, China).
• Feasibility study has been done for the construction of dry port in Sharalahi,
Rajbiraj, Gaur and Maheshpur Customs .
• Integrated check post construction in Birantagar, Birgunj, Nepalgunj and
Bhairawa customs under process.
Transport Facilitation Measures
Proposed ICD
Transport Facilitation Measures
Warehousing
 The TIA customs has a modern cargo complex of adequate area.
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But laging well managed.
Birgunj ICD has all facilities of handling all types of traffics
including containers, bulk and break cargo.
Birgunj customs has three warehouses; one for exports and two
for imports. Of these three warehouses, one belongs to National
Trading Limited, a state owned trading company and two
belong to NTWCL.
The Biratnagar ,Bhairahwa warehouse is handled by the
terminal operator.
The Kakarvitta is handled by NTWCL.
Transport Facilitation Measures
 Custom Offices
Offices
No
rth
Main
Customs
9
20 + Airport+
PCA =22
31
Sub
Customs
6
136+ Post office
= 137
143
Total
Customs
15
159
174
South
Total
Acts, Policies and Major Initiatives Taken
• Custom
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Acts and Regulations amended and new provisions are
incorporated in line with Revised Kyoto Convention and WTO Valuation
system
Trade Policy 2009 and Industrial Policy 2010
EIF Steering Committee under the chairmanship of Chief Secretary which is
apex body for all trade and trade facilitation related issues
Trade and Transport Facilitation Committee under Commerce Secretary to
steer trade facilitation
Trade Facilitation committee formed in Department of Customs under
chairmanship of DG.
Customs opening days and hours harmonized with the bordering countries’
India and China’s opening days and hours
Tariff rates streamlined as per WTO commitments
100 percent performance based incentives to the customs employees
Emphasis on good moral conduct and transparency on operation
Acts, Policies and Major Initiatives Taken
 Trade Facilitation by Customs Reform &
Modernization Strategy
 CRM Action Plan 2003-2006 (Completed)
 CRM Action Plan 2006-2009 (Completed)
 CRM Action Plan 2009-2013 (Completed)
 CRM Action Plan 2013-2017 ( Proposed/ Ongoing )
Key Challenges of Trade Facilitation in Nepal
 Concluding A framework agreement in south Asia which
would include elements such as;
 Harmonization of rules, procedures and documents
 Mutual recognition of certificates, licenses and polices,
 Effictive dispute settlement and risk management systems,
 Special rules for certain products , Infrastructure up gradation,
particularly in LDCs (Adhikary)
 Facilitating transportation of goods in transit for intra –
regional as well as extra-regional trade in keeping with the
spirit of Article V of the General Agreement on Tarrffs and
Trade (GATT) relating to "Freedom of Transit"
 Supporting the implementation of the SAFTA and deepening
regional economic integration
Key Challenges of Trade Facilitation in Nepal
 Provision of multimodal transport facility
 Adoption of the TIR (Transports International Routers)
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system or a similar regionally based equivalent customs
transit system.
Investment in infrastructure hardware as well as software
Quality of roads and railways infrastructure and survice
Gauge compatibility for railways
Border facilities including customs, infrastructure
Use of ICT in trade administration)
Issues on third country passage via India
Quality control/quarantine related issue
Illegal trade regulation
Key Challenges of Trade Facilitation in Nepal
Working modalities
 Weakly harmonized working hours between Bilateral trade
with India and Bangladesh
 More steps, Documents requirements and time to clear
Kolkata Bound import and export cargo
 Lack of cooperation and integrated approach among border
agencies
 Excessive physical intervention at the border points
Others
 Domestic Supply side Constraints (Inadequate infrastructure,
transportation, meeting the certification requirement)
 Barring of Nepalese transporters heading from Kolkata
 Lack of Comprehensive Transport Agreement
Key Challenges of Trade Facilitation in Nepal
Procedures and Documents at Kolkata Port
• 37 Steps
• Nine Documents
required at
Kolkata Customs
by Rail or Road.
Way Forward in TF in Future Days
Short term (within one year)
 CTD automation of Kolkata Bound Transit Cargo
 Accession to Revised Kyoto Convention
(with IFC support)
 Trade Facilitation Framework Master Plan
(with WB support)
 Single Window Master Plan
(with WB support)
 Logistics Master Plan
(with WB support)
 E-Customs Master Plan
(with ADB support)
Way Forward in TF in Future Days
Medium term (within three year)
 Trade Corridors Development
(with ADB support)
 Process and Procedures simplification for E-
Customs
 Implementation of E-Customs Master Plan
 Readiness to implement Single Window
 Operation of additional four ICPs and one ICD
 Transshipment through BL for transit cargo
Way Forward in TF in Future Days
Long term (within five year)
 National Single Window
 Cross Border Harmonization and Exchange
Activities in Pipeline
 Web Based System Development for Customs
(with Korean support)
 Strategic Action Plan Development
(with IMF and USAID support)
Let us have Joint Effort from the respective Governments,
People and Entrepreneurs of this region as well as the
development partners working in this region to build
Better SSWA.