India signs fresh free-trade pact with Nepal

India and Nepal signed a fresh trade treaty on Saturday to allow Nepalese goods duty-free access to India, and to take steps to control the illegal entry of goods from third countries. Under the agreement, India will also invest Rs1,485 crore to beef up Nepal's road and rail links in the underdeveloped Terai region.

The treaty, signed during a visit to New Delhi by Nepal's new Prime Minister Madhav Kumar Nepal, will allow Nepal to use the southern port of Vishakhapatnam for foreign trade. Nepal's request for using an additional port on the west coast will be favourably considered as well, officials said.

To improve rail connectivity, two cross-border links, including the Jogbani-Biratnagar route, will be built with Indian assistance at an estimated cost of Rs680 crore.

As Kathmandu plans to generate 25,000 MW of hydroelectricity over the next 20 years, the two countries have agreed to expedite the construction of the Dhalkebar-Muzaffarpur 400 kv cross-border transmission line, for which the modalities are to be developed.

Nepal has also requested India to consider removing its ban on the export of essential commodities.

The trade treaty, which was under negotiation for two years, is meant to replace the agreements of 1991 and 1996 that give goods manufactured in Nepal a duty-free access in India.