WT/COMTD/RTA18/M/1  
 
19 May 2021 
(21-4201) Page: 1/3 
Committee on Trade and Development  
Thirteenth Dedicated Session on Regional Trade  
Agreements    
 
 
REVISED TREATY OF TRADE BETWEEN INDIA AND NEPAL (GOODS)  
NOTE ON THE MEETING OF 2 9 MARCH 2021  
Chairman: H.E. Dr . Muhammad Mujtaba Piracha (Pakistan)  
1.  The 1 3th Dedicated Session on Regional Trade Agreements (RTAs) of the Committee on Trade  and 
Development (CTD) was convened in document WTO/AIR/COMTD/RTA/8/Rev.1 of 19 March 2021.  
Under item  C (I) of the agenda, the Committee considered the Revised Treaty of Trade  between 
India and Nepal (Goods) (WT/COMTD/RTA18/N/1, WT/COMTD/RTA18/1 ). The present document 
contains the minutes relating to the consideration of this agreement.1  
2.  The Chairman  said that t he Revised Treaty of Trade between India and Nepal was notified u nder 
paragraph 4(a) of the Enabling Clause on 2 August 2010. The notification was originally circulated 
on 3 August 2010 in document WT/COMTD/N/34, and then re -circulated on 14 December 2020 in 
document WT/COMTD/RTA18/N/1, in accordance with the new symbol s for notifications and 
subsequent documentation relating to RTAs agreed to by the CTD at its 108th Regular Session on 
5 April 2019.  The factual presentation on the Revised Treaty of Trade between India and 
Nepal  – document WT/COMTD /RTA18/1 dated 15 December 2020 – was prepared by the Secretariat 
on its own responsibility, and in full consultation with the parties.  No written questions were received 
on this agreement before the present  meeting. As per the usual practice, h e wished to  organize the 
consideration of the agreement by first inviting the parties to make their introductory remarks. The 
floor would then be opened for interventions by other Members, including on the factual 
presentation. The parties could provide responses at any time during the discussion to any questions 
raised. Members would also have the opportunity to ask follow -up written questions after the 
meeting was concluded. He would remind Members of the timeframes for follow -up questions and 
responses at the end o f the discussion on the agreement.  
3.  The representative of India expressed gratitude for the comprehensive and detailed 
factual  presentation prepared by the Secretariat. She said that the Revised Treaty of Trade between 
India and Nepal came into force in 200 9. The agreement  aimed to expand trade and encourage 
collaboration in economic development for the mutual benefit of the two countries. The 
factual  presentation noted that India was Nepal's largest export destination in 2018 , comprising 
58.9% of Nepal’s ex ports. Nepal was India's eighth  largest export destination, comprising 2.3% of 
Indian  exports. Under the agreement , India had agreed to promote the industrial development of 
Nepal through the grant ing, on a non-reciprocal basis, of special favourable treatment to industrial 
products manufactured in Nepal and exported to India  – in respect of customs dut ies and 
quantitative restrictions which were normally applicable to these products. Prior to the entry into 
force of the agreement  in 2009, 2 % of India's tariff lines – which amount ed to 228 tariff lines  – were 
duty-free on a  most-favoured -nation ( MFN) basis. This corresponded to 0.2% of India's total imports 
from Nepal during the 2006-2008 period . Upon entry into force of the agreement , an add itional 
94.7% of India’s tariff lines – a total of 10,748 tariff lines  – became duty -free. This corresponded to 
80.1% of India's imports from Nepal. She also noted that Nepal’s duty -free tariff s for Indian imports 
had increased by an additional 8.9% of tariff lines upon the entry into force  of the agreement . 
The liberali zed tariff  lines correspond ed to 5.7% of Nepal's imports from India. Around 93% of 
Indian  imports into Nepal remain ed dutiable. Total bilateral trade between the two countries reached 
 
1 The general minutes of the CTD's 1 3th Dedicated Session on RTAs are contained in document 
WT/COMTD/RTA/M/1 3. WT/COMTD /RTA18/M/1  
 
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  USD 8.27 billion in the 2018-2019 period, and ha d been steadily increasing over the years. 
In closing, she thank ed Members for their interest in th e transparency and monitoring exercise.  
4.  The representative of Nepal  said that the Chairman could count on Nepal 's support and 
cooperation during his tenure.  Appreciation was also expressed for the contributions of the previous 
Chair man. He additionally  thanked the Secretariat for the preparation of the factual presentation. 
He went on to say that Nepal and India were close neighbo urs, and that their ties had further 
strengthened  over time  through  increased interactions and close cooperation. The countries had 
enjoy ed longstanding and intensive trade relations, and Nepal’s partnership with India in trade and 
transit was a matter of utmost importance to Nepal. The parties  had formally signed the Treaty  of 
Trade and Commerce in 1950 , and had subsequently updated their trade relations in different time 
periods. The Revised Treaty of Trade was the  accumulated outcome of the parties'  longstanding 
experience s, and aimed to further strengthen their trade relation s in a more transparent, predictable 
and rule -based manner. The agreement  was signed by the parties  on 27 October 2009 , and came 
into force o n the same day . It superseded its predecessor  – the Treaty of Trade signed in 1991 and 
its amendments thereafter  – and cover ed only trade in goods. Th e factual presentation on this 
agreement was the first on a Nepal -India Trade Treaty to be discussed in the CTD. His delegation 
believe d that th e factual presentation would contribute to ensuring transparency for RTAs,  as per 
the spirit of WTO  law. Though the size and composition of Nepal's and India's  economies were 
significantly different, the agreement ha d become instrumental in facilitating bilateral trade 
relation s. The agreement was initially  to remain in force for a period of seven years , and was  to be 
automatically extended for a further period of seven year s unless a written notice of intention to 
terminate the agreement was given by any party in advance . In this regard, he indicated  that the 
agreement had  already been extended for seven more years. The agreement could  also be amended 
through mutual agreemen t. Under the terms of  the agreement, each party was to  accord to goods , 
of the other party, treatment no less favourable than what it accord ed to the goods of a non -party. 
This was  with respect to customs duties and charges of any kind imposed on , or in connection with , 
importation and exportation  – as well as with respect to import regulations , including quantitative 
restrictions. The agreement additionally  ensure d national treatme nt to each other 's goods , and had 
the objective to explore and undertake all measures  – including technical cooperation – to promote, 
facilitate, expand and diversify trade between the two  countries.  
5.  Some of the major aspects of the agreement included t rade through mutually agreed trade 
routes ; the simplification, standardization and harmonization of customs, transport and other related 
procedures ; the development of border infrastructure ; no provisions of export duties and charges ; 
and India’s  best endeavo ur to assist Nepal to increase its capacity to trade through improvement in 
technical standards, quarantine and testing facilities , and related human resources. Other important 
features of the agreement included the adoption of necessary measu res to reduce or eliminate 
non-tariff, para -tariff and other barriers ; exchanging trade data ; and undertaking all necessary 
measures for the free and unhampered flow of goods. He also pointed to reciprocal duty -free market 
access for primary products ; duty-free market access to Indian markets for Nepal’s industrial 
products qualifying though the rules of origin criterion ; provisions for the invocation of safeguard 
measures in some situation s; and  quantitative restrictions for preferential access to Indian m arkets 
for vegetable fats, acrylic yarn, copper products , and zinc oxides produced in Nepal. In addition, 
there were provisions concerning the granting of a margin of preference by Nepal to imports of 
industrial products from India , and the favourable treatment by India to Nepal ese goods  produced 
by small -scale enterprises. He indicated that t he agreement establishe d bilateral consultation 
mechanisms , ranging from the Intergovernmental Committee (IGC) at the Commerce Secretary 
level to the working level at border points , so as  to facilitate implementation and  resolve issues 
affecting the operation of the agreement. The IGC had met in December 2020 and had discussed  a 
wide range of issues  of mutual interest concerning trade, transit, investment , and greater economic 
integration between the two countries. Trade data reveal ed a significant  increase in the volume of 
bilateral trade over the years , which was dominated by manufactured goods. India remain ed the 
largest trade partner of Nepal , both in terms of import s and export s of goods . Trade with India 
accounted for  about 62.2% of Nepal’s total trade in the fiscal year 2019 -2020, and  compris ed 
export s of 70 billion  Nepalese rupees (NPR) and import s of NPR 735 billion. Similarly, Nepal was the 
second largest trading partner of India in South Asia, and was one of the top 10  export destinations WT/COMTD/RTA18/M/1  
 
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  of Indian goods in the world market. Nepal's trade deficit ha d widened significantly over the period , 
mainly due to r ising imports, while exports had remain ed relatively stable.2 
6.  The representative of the European Union  expressed her delegation’s appreciation to the parties 
for the transparency provided.   
7.  The representative of the United States  thanked India and Nepal for participating in the 
transparency exercise.  She noted that both parties ha d non-notified agreements that were in force , 
and urged the parties to notify these agreements promptly.  
8.  The Chairman  said that  oral discussion of the Revised Treaty of Tra de between India and Nepal  
could be concluded in accordance with paragraph 11 of the Transparency Mechanism  for RTAs 
(RTA TM). Follow-up questions  by Members would need to be submitted in writing to the Secretariat 
within one week, by 5 April 2021. The par ties would then be given two weeks to submit written 
replies , by no later than  19 April 2021. In accordance with paragraph 13 of the RTA TM , all written 
submissions as well as the minutes of th e present  meeting would  be circulated promptly in all 
WTO official languages, and w ould be made available on the WTO website.  
9.  The representative of the United States  thanked the Chairman for providing the deadline for the 
submission of follow -up questions. In light of the connection problems experienced when the 
representative of Nepal was delivering his statement, she asked whether it would be possible for 
Members to review Nepal's statement prior to th is deadline.  
10.  A representative of the Development Divisi on said that he would follow up with the delegation  
of Nepal after the present meeting . If there were no objections by Nepal, the statement would be 
shared with Members.  
11.  The Committee took note  of all interventions .  
 
__________  
 
2 The intervention  by Nepal  is reflected in this Note at the point when the Chairman invited the delegation 
of Nepal to take the floor  to introduce the agreement . However, connection problems were experienced during 
the remote delivery of this intervention by Nepal , and  the statemen t was delivered through several attempts 
over the course of the meeting.