BHIM BHURTEL. Nepal looks toward China as a measure of last resort

Jun 23, 2018

After an exchange of high-level trips between Nepal and India, Nepalese Prime Minister K P Sharma Oli is to land in Beijing on Tuesday for a five-day state visit. It will be his second state visit since his accession to the Prime Minister’s Office after his party’s landslide victory in the general election in November.

Sources at the Nepalese Ministry of Foreign Affairs have said that China and Nepal would ink several deals to implement the trade and transit treaty of 2016 and the connectivity project under the Belt and Road Initiative (BRI).

Indian media, strategic analysts, and academia have been portraying Nepal’s increasing engagement with China in the areas of trade and transit, investment and the BRI as Oli’s government tilting toward China and demonstrative of China’s aim to limit India’s geopolitical strategic space. However, Nepal has not tilted toward China; India itself has been pushing Nepal toward China for a long time.

India has been imposing a permanent economic blockade by creating many hurdles to Nepalese goods exported to India and third countries, and it is the main cause of an enormous trade deficit that is the upshot of the sluggish economic growth of Nepal. New Delhi has imposed these kinds of hurdles more than 150 times since Nepal and India signed a new trade and transit treaty in 1996, and has created barriers to Nepalese agriculture goods four times in the first six months of this year alone.

Because of the Indian obstruction to goods, Nepal has signed a trade and transit treaty with China as a measure of last resort. The Indian foreign-policy regime should be mindful that no country is able to fulfill Indian interests while economically poor, weak, and bearing an enormous trade deficit and stagnant economy.

Indian political leaders, diplomats, academia, and media repeatedly express that Nepal and India have had a special relationship from the time of antiquity. If India thinks that Indo-Nepalese ties are so valuable, why are there tariffs? Why are there quarantine check posts? Why does India need a sanitary and phytosanitary standard (SPS) for Nepalese agricultural products?

A vast discrepancy exists between what Indian leaders say and the ground realities. For instance, when Indian Prime Minister Narendra Modi delivered a speech at his reception in Janakpur on a state visit to Nepal last month, a long queue of trucks with a load of green tea was waiting for permission from Indian quarantine officials in Kolkata. Indian quarantine posts are far from the India-Nepal border points, such as in Kolkata and Patna.

South Asia Watch on Trade, Economics and Environment (SAWTEE) carried out a study a few years back that pointed out that para-tariffs such as countervailing duties and special additional duties and their non-transparent applications to Nepalese goods were creating hurdles to exports from India.

The study also advised that the quarantine was another critical non-tariff barrier that played a crucial role in maintaining an undeclared economic blockade on Nepalese goods.

SPS and technical barriers to trade (TBT) make up 80-85% of the non-tariff barriers to Nepalese exports. As a result, Nepal’s trade deficit has ballooned.

Nepal’s move toward a trade partnership with China is the measure of the last resort to assuage the trade deficit, and India actually cannot prevent Nepal’s trade and transit partnership with hollow rhetoric. If India wants to avert Nepal’s looking toward China, it needs to remove all the non-tariff, para-tariff and TBT measures that hinder Nepal’s exports to India.

India needs to offer more than what China has offered Nepal. Therefore, it needs to take bold steps to reduce Nepal’s trade imbalance with India by providing unilateral concessions to Nepalese goods entering India as much as China has been providing.

Besides, India does not abide by the trade rules of the South Asian Free Trade Agreement (SAFTA), which itself was drafted through Indian leadership. India also does not abide by the multilateral rules of the World Trade Organization. India will be taken as credible if it abides by bilateral and multilateral trade agreements and offers fair treatment to Nepal delineated thereby.

Indian media, academia and foreign-policy experts think in terms of nationality but not rationality. India should be mindful that as much as Indians love their country, Nepalis too have the inalienable right to love their own country. Similarly, as much as Indian people are nationalists, Nepalis have reasons to be just as nationalist. No Nepali wants to be weak, backward and suffering from the status quo to serve Indian interests. Nepal thinks of its own national interest first, not those of others.

A prominent Nepali columnist and historian, Dinesh Satyal, popularly known as Saurav, recently advocated that Nepal needed to use Chines rather than Indian transit routes in his new book, Asangati (“The Paradoxes”): ”Nepal’s trade deficit is due to the wrong location of seaports that Nepal is using.”

He notes that the Hindu science of architecture, the vastu sashtra, holds that the North is the abode of the god of wealth, Kuber, and the East is the abode of the god of knowledge, Indra. Therefore, a northeasterly direction, Isan, “embodies the zenith of wealth and wisdom.” Thus a considerable number of Nepali citizens advocate using trade routes through China, which lie to the northeast.

India’s unfair treatment of Nepalese goods entering India is the precursor to creating the preponderant narratives of using China’s seaports and maritime routes.

It is clear that if Oli relinquishes his vow to engage with China, his party will be dethroned from the government in the 2022 general election.

Bhim Bhutel is managing editor of, visiting faculty for a master’s in international relations and diplomacy, Tribhuwan University in Kathmandu, and was the executive director of the Nepal South Asia Center (2009-14), a Kathmandu-based South Asian development think-tank.

This article first appeared in the Asian Times.

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