AugmentingBilateralTradeBetweenIndia&Nepal

CaseforenhancingIndiasExports

IndiaNepal:TradeandCommerceOverview
India is Nepals largest trade partner and biggest source of foreign investment. India accountsforabout44%ofthetotalapprovedForeignDirectInvestment(FDI)and25.2% of the approved ventures with foreign investment in Nepal. Indian business ventures in Nepal cover diverse fields like Manufacturing, Services (banking, insurance, dry port, educationandtelecom),PowersectorandTourism.LeadingIndiancompaniesoperating in Nepal include ITC, Dabur India, Hindustan Unilever, VSNL, TCIL, MTNL, State Bank of India, Punjab National Bank, Life Insurance Corporation of India, Asian Paints, CONCOR, GMR India, IL&FS , Manipal Group, MIT Group Holdings, Nupur International, Transworld Group, Patel Engineering, Bhilwara Energy, Bhushan Group, and Birla Corporation. During 201011, IndiaNepal total trade stood at USD 2,717.80 Million and Indias exports to Nepal had grown from USD 927.4 Million in 200607 to USD 2,204.40 Million in 201011, recording a 137.7 % hike. Nepals major exports to India include G.I sheet, Threads, Polyester yarn, Jute goods, vanaspati ghee, textiles, Juice, GI Wire, large cardamom and semiprocessed and processed food products. Of these items the G. I. sheetsandwirearemostlyprocessedfromrawmaterialsimportedfromIndia. A bilateral framework for promoting intercountry trade was signed between India and Nepal in 1991, comprising IndoNepal Treaties of Trade, Transit, and Agreement of Co operation to Control Unauthorised Trade. The Trade treaty was renewed in 2007; the treaty of Transit was renewed for seven years in 2006. The Agreement of Cooperation between India and Nepal to Control Unauthorised Trade was renewed for five years in 2007. India and Nepal have signed a Rail Services Agreement (RSA) in May 2004, which was modified in December 2008. A bilateral Air Services Agreement was initiated betweenthetwocountriesin1997.

FocusSectorsforenhancedTrade
MajorIndianExportstoNepalincludethefollowing

Petroleumproducts Motorvehiclesandspareparts M.S.billet Medicines Machineryandspares Coldrolledsheetincoil Chemicals

India is the only country which provides transit facilities to landlocked Nepal. Nepals nearest port facilities are at Haldia port, Kolkata and Chittagoan, Mangola port in Bangladesh. Government of India has provided financial assistance to Nepal for the development of crossborder trade infrastructure, including the upgradation of four major custom checkpoints at BirgunjRaxaul, BiratnagarJogbani, BhairahawaSunauli andNepalgunjRupediyatointernationalstandards;layingofanoilpipelinefromRaxaul to Amlekhgunj, through a joint venture between Indian Oil Corporation and Nepal Oil Corporation; upgradation of the approach highways to the border on the Indian side; upgradationandexpansionoftheroadnetworkintheTerairegionofNepal;and,broad gaugingandextensionofrailwaylinkstoNepal.

Nepal:EnergyProfile
Nepalwithacountrysizespanning147181km,populationnumbering28563377,and a GDP (PPP) of $37.74 billion in 2011 ranks among the lowest in the world in terms of net electricity generation per capita and energy intensity; only about 46% of Nepal's population hasaccesstoelectricity.Thecountryisdevoidofanyfossilfuelreservesand less than 1% of the potential 83,000 MW of its hydropower is currently being tapped. The Nepalese government had declared anational energycrisis in 2008 in view ofthe criticality of the situation. The annual electricity generation on the grid system in Nepal in 20092010 was about 3,690 GWh, of which around 57% was generated by power plants owned by the Nepal Electricity Authority (NEA), 26% by Independent power producers (IPPs), and the remaining 17% was imported from the Indian grid. Nepals oil imports in 2009 were 13,740 bbl/day. The peak energy demand in Nepal in the next eightyearsisslatedtogoupby5000MW. In 2011 the World Bank had approved a US$ 99 million package for the NepalIndia ElectricityTransmissionandTradeProject(NIETTP)towardsassistingtheGovernmentof Nepal in mitigating a national energy crisis. The landmark, 1000 MW crossborder transmission project will provide Nepal with at least 100 MW of additional electricity imported from India. It will also help to develop key segments of the high voltage system to expand access to electricity across Nepal. By virtue of its unique geographical location, Indias participation is essential to create a South Asia interconnected electricitygrid.

By virtue of its topography and natural resource endowments, Nepal has a distinct advantage in a multitude of renewable energy options, like Solar Energy, Wind Energy, Biomass Energy and Geothermal Energy. In 2011, Nepal had a total installed renewable capacity (including biomass, geothermal, hydroelectricity, solar & wind) of 890 megawatts, an increase of 74 megawatts (or 9.01%) on the previous year. The 890 megawatts of installed renewable capacity represents 93.98% of total installed energy capacity. Globally, the Nepalese renewable market is ranked at 35 for total installed renewable capacity, behind Swaziland (41 MW) and ahead of Mauritania (97 MW). Installed Renewable Energy Capacity in Kw Per Sq Km for Nepal is a miniscule 6.04. The per capita consumption of electricity in Nepal is around 77kWh vis a vis an estimated 263kWh for neighbouring Bhutan. Nepals eagerness to tap onto its renewable energy base is corroborated by Dhaubadi, a remote Nepalese village, which became Asia's first 'renewableenergyvillage'withtheinstallationofaminiwindsolarhybridpowersystem in 2011, with financial and technical support from the Asian Development Bank (ADB). Microhydro,Solarphotovoltaic,Biogas,improvedcookingstovecanbethelikelyareas ofbusinesscooperationbetweenIndiaandNepal.

NepalRenewableEnergyProfile(20072011)
Year 2007 2008 2009 2010 2011 Source:Energici Installed MW 560 560 660 738 816 AddedMW 0 100 78 79 74 FinalMW 560 660 738 816 890 Growth% (YoY growth) 0% 17.86% 11.74% 10.68% 9.01%

RenewableEnergyTargets:Nepal
EnergyByTechnology Hydro SolarPV Wind Source:REN21 IndiahasbeenassistingNepalinthedevelopmentofitshydropowerpotentialandfour HE schemes viz. Pokhra (1 MW), Trisuli (21 MW), Western Gandak (15 MW) and Devighat (14.1 MW) have been implemented with Indian Assistance. Nepal has already awarded prime hydro power projects like the Arun3 hydropower project to the India Value(MW) 15.0 3.0 1.0 Year 2013 2013 2013

based Sutlej Jal Vidyut Nigam Ltd. (SJVNL) and the Upper Karnali hydropower project to aconsortiumconsistingofGMRGroupcompaniesandItalianThaiDevelopmentProject CoofThailandonabuildownoperatetransferbasis.

RiverbasinwiseHydropowerpotential,Nepal
PowerPotential (MW) Major Small Kosi 18750 3600 Gandak 17950 2700 Karnali(Ghagra) 28840 3170 Mahakali(Sarda) 3840 0320 Southernrivers 3070 1040 Total 72450 10830 Source:CentralElectricityAuthority,India RiverBasin Total(MW) 22530 20650 32010 4160 4110 83280

MajorUpcomingHydro/MultipurposeprojectsunderIndoNepal Cooperation
Project Status Pancheshwar Multipurpose Proposed Project Sapta Kosi High Dam Multipurpose Project and Under Sun Kosi Storage cum Consideration DiversionScheme Karnali MultiPurpose Proposed Project BurhiGandakiH.E.Project Proposed Naumure Storage cum Under HydroElectricProject consideration Potential (5600MW) River Mahakali (Sarda) Saptakoshi

(3300MW)

(10800MW) (600MW) (225MW)

Karnali BurhiGandaki WestRapti

PotentialHydropowerProjectsinNepal
Sl.No. 1 3 Project WestSeti BudhiGandaki Capacity(MW) 750 600

4 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

KaliGandakiII KarnaliChisapani UpperKarnali Chamelia Pancheswor Thulodhunga Tamor/Mewa DudhKoshi BudhiGanga RahughatKhola Likhu4 KabeliA UpperMarshyangdiA KulekhaniIII Andhikhola(Storage) KhimtiII UpperModiA LangtangKhola(Storage) MadiIshaneswor(Storage) UpperSeti(Storage) Kankai(Storage) UpperTamakoshi

660 10800 300 30 6480 25 100 300 20 27 51 30 121 45 180 27 42 218 86 122 60 250

Source:IndependentPowerProducers,Nepal(IPPAN) ICC feels that India and Nepal can fruitfully carry forward their commitment towards initiatingjointventureprojectsinpowergenerationinNepal.