India And Nepal Sign Trade Treaty

by Mary Swire, Tax-News.com, Hong Kong

30 October 2009

India and Nepal have signed a new India-Nepal Treaty of Trade and Agreement of Cooperation to Control Unauthorized Trade, which will lower export taxes to Nepal and simplify the export refunds procedure.

The 2009 Treaty revises a 1996 Trade Treaty between the two countries, 1996 marking a turning point in trade relations between the two countries, with phenomenal growth of bilateral trade.

In addition to the 1996 treaty benefits, the new treaty will include new provisions to enhance trade as follows:

• The validity of the Treaty has been increased from five to seven years, along with the provision of automatic seven year extensions to provide a more stable basis for bilateral trade.
• Bilateral trade conducted in Indian Rupees will be on par with trade in convertible currency and will end the cumbersome Duty Refund Procedure (DRP).
• It will provide Nepal a direct control on the customs duty revenues on import of manufactured goods from India. It will also allow Indian exports to avail benefit of Indian export promotion schemes, effective from a date to be agreed.
• The time limit for temporary import of machinery and equipment for repair and maintenance has been raised from 3 to 10 years.
• Duty free access to India without any quantitative restrictions will be permitted on a list of primary products, including floriculture products, atta, bran, husk, bristles, herbs, stone aggregates, boulders, sand and gravel.
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