India inks fresh trade pact with Nepal; extends $250m credit

Giving a fillip to bilateral ties, Prime Minister Manmohan Singh and his visiting Nepalese counterpart Baburam Bhattarai signed several agreements on Friday, mainly aimed at boosting infrastructure development in the landlocked mountainous country.

Key among these was a $250-million line of credit (LoC) extended by India, as well as a bilateral investment promotion and protection agreement, which is expected to depoliticise trade between the two countries and boost investment flow.

The two leaders had an extended one-on-one meeting on Friday, the last day of the former Maoist leader Bhattarai's visit, before the delegation-level talks.

The investment promotion agreement seeks to promote and protect investments from either country in the territory of the other country, aiming to increase bilateral investment flow. The agreement requires each country to encourage and create favourable conditions for investors of the other nation.

Officials said the principles of most favoured nation (MFN) treatment and national treatment (NT) have also been asserted in the agreement.

"Investments from either country in the territory of the other country are to be accorded NT and MFN treatment, which means that the investment shall be provided treatment which shall not be less favourable than that provided by the country to investments of its own investors or investors from any other country," said a statement.