The overhaul of the 17-year rail service agreement on Wednesday removed bottlenecks that Nepal has long faced, especially in importing and exporting goods via Indian rail freight services.
According to the revised text of the letter of exchange, all authorized private container train operators (Indian and Nepalese) will be able to use the Indian rail network to transport freight containers for imports or exports from Nepal, thus ending the monopoly of the Indian government. – owned by Container Corporation of India (CONCOR).
“This liberalization will allow market forces to intervene in the rail container freight segment in Nepal, and is likely to reduce transport costs in the medium term, to the benefit of the Nepalese consumer,” said a Nepalese official involved in the process. negotiation process with India. La Poste on condition of anonymity.
The new deal will come into effect once the cabinets of both countries approve it.
The agreement also allows Indian Railways freight services to move and pick up cargo at border points other than Raxaul / Birgunj.
“The scope of the current limited freight movement and facilities from various Indian ports to the border Nepalese industrial zones has been extended by this agreement,” the officials said.
As Nepal and India plan to expand more cross-border rail networks, experts and officials said the deal has opened up new prospects for cooperation in Nepal-India trade and transit sectors.
After the entry into force of the revised agreement, the railways / wagons owned by the Nepal Railway Company are also allowed to operate freight to Nepal (inbound and outbound) on the Indian rail network in accordance with Indian Railways standards and procedures. Previously, this was only allowed for cars owned by Indian Railways and CONCOR.
“The monopoly that CONCOR has enjoyed since 2014 ended with this revised agreement,” said Chandra Ghimire, outgoing secretary at the Ministry of Trade, Industry and Supply. “Since CONCOR was also operating for Indian companies, it paid less attention to our side.
Nepalese traders have long complained about difficulties in trading with third countries in the absence of a timely assessment and review of the rail services agreement with India.
Rajan Sharma, former chairman of the Nepal Freight Forwarders Association, said breaking CONCOR’s monopoly in rail service is good for competitive rail service.
“We have been raising the issue of breaking CONCOR’s monopoly for over a decade and Indian private rail companies have also been asking us to lobby to invite competition in rail services for the delivery of goods to and from Nepal. “Sharma told the Post.
Officials said in the absence of an updated agreement, other agreements that were signed between the two countries could not be implemented effectively.
After the agreement enters into force, Indian private operators will be able to transport goods to Nepal from the ports of Visakhapatnam and Kolkata, as well as other ports, allowing Nepal to use more Indian seaports. close to the main customs points in western and far western Nepal for trade with third countries. in accordance with the transit treaty between Nepal and India. At present, rail freight can only be transported on the Kolkata-Raxaul / Birgunj route.
“The current rail freight or freight facility is limited only to Raxaul-Birgunj. We need to extend its reach to other dry ports and industrial corridors in Nepal like Nepalgunj, Bhairahawa, Biratnagar, Kakarvitta and other already established industrial zones and set up industrial hubs, ”said Ghimire. “If we can get raw materials through rail instead of trucks, we will have abundant raw materials that will help us achieve rapid industrialization. ”
The new amendment also ensured the competitiveness of private actors.
“Several Indian private rail freight companies doing business in India offered a much cheaper service than CONCOR,” the official said. “The end of the monopoly and the guarantee of competitiveness are a major achievement. “
With the increase in trade with other countries, Nepal demanded the extension of rail services to all trade points in the country.
“There is now diversification in our existing facilities,” a Nepalese diplomat based in New Delhi said over the phone. “The majority of our concerns have been resolved, we must now increase our capacity for full use of this revised agreement.”
The new agreement will be more important after the entry into service of the four other rail links planned between the two countries. These four cross links include Jogbani-Biratnagar, Rupaidiya-Kohalpur, New Jalpaiguri-Kakarbhitta, and Nautanwa-Bhairawaha.
A feasibility study for bringing the rail to Kathmandu from Raxaul, India is also under consideration.
“We need to add rail service to our industrial hubs so that we can transport raw materials from Indian ports to these industrial hubs, which will cost less than by truck,” Ghimire said. “We need to resolve these issues in the coming days to increase our industrial inputs. ”
Another important point to remember from the revised rail service agreement is that all kinds of wagons that can carry freight on the Indian rail network in India can also carry freight to and from Nepal. Previously, this installation was limited to certain types of wagons.
Liberalization will especially reduce transportation costs for automobiles that are carried on special wagons that were not included in the 2004 rail service agreement, as they did not exist at the time, the official said.
“Now we can easily operate our cross-border railroad and expand our business. We can also do business through India if we can compete with Indian companies, ”said Balaram Mishra, former director general of the Ministry of Railways. “The only thing we need is to develop more dry ports, industrial zones. Otherwise, these facilities are not used, ”Mishra said.
The private sector, however, has a word of warning.
“Nepalese importers are unlikely to benefit directly from competitive prices, as most Nepalese importers rely on foreign exporters to book rail services and they charge freight charges in the cost of goods. Therefore, they will benefit more because they can get competitive prices, ”said Sharma, the freight forwarder. “Nepalese importers can only benefit if they negotiate with railway companies for competitive prices or negotiate with exporters for reduced transport costs. “
(Prithvi Man Shrestha contributed reporting.)