Ministry of Commerce And Supplies - Enhanced Integrated ...

N T I S2010India’s view is that there are no current issues with respect to quarantine for perishable goods; Nepal needs to address the issues of political stability and law and order to encourage foreigninvestment. Law and order (including a serious reduction in the number and effects of strikes)must be improved and guaranteed. In addition, the right policies must be in place to attract foreigninvestments and stimulate economic activities. Infrastructure is weak at all levels and the existing oneis fast deteriorating. Nepal’s labour law also appears to be too rigid and hostile to investment. NoIndian investment has taken place since 2008 and no new investment is likely to take place until someof these issues are tackled; India believes Nepal has potentials to further develop export of apples, horticulture products, floricultureproducts, and medicinal herbs and essential oils. In floriculture, bilateral trade could be developed sothat Nepali flowers be gathered into economically viable quantities and qualities and exported to thirdmarkets via India; Tourism, especially religious, gambling and adventure tourism, retains huge potentials. India hasrecently liberalized the air transport services opening up opportunities for more seat capacity on theIndia-Nepal air route. Nepal could also become once again a place where Indian movies are shotand consideration should be given to the re-development of a domestic film industry. Sports andentertainment services (i.e. golf, cricket, others) could be further developed and promoted, particularlybecause of the very good year-round climate and outdoor conditions in Nepal; Nepal has a recognized competitive advantage in medical plants and herbs. Herbs for traditional andreligious medicines and herbal teas also stand out as potential lucrative sectors in which to concentratedevelopment efforts and attract investment. Related health services could be provided from Nepal tomost countries in South Asia; Cement may be a sector to further develop for both domestic and export needs. Hydropower is also akey sector that could give Nepal important economic and geo-political benefits; Nepalese producers and exporters need to develop branding and marketing.These observations reflect the fact that there is genuine and considerable interest from India’s businesscommunity for Nepal as both an FDI destination and a trading partner. The current perception, however,is that Nepal is at present a risky place to do business, largely because of domestic deficiencies in policy,infrastructure, regulatory environment, and labour relations.3.6 Recommendations: Challenges and Opportunities ShapingNepal-India TradeIn general, the field work carried out in support of this chapter confirms many of the export opportunitiesidentified in Chapter 2, including in ginger, tea, lentils, medicinal herbs and essential oils, tourism, hydropower,health services, education, or IT and BPO services, at least in so far as Nepal-India trade is concerned. It alsosuggests other possible areas, including horticulture and floriculture.The field work also points to a number of challenges, many of which are examined in more detail in some ofthe remaining chapters of this study: Most issues pertaining to the category of import policies appear to relate to infrastructural, regulatory,institutional weaknesses and bottlenecks. As indicated, it is difficult to see a truly protectionist orWTO illegal ‘hidden agenda’ on the part of India in these trade impediments. The lack of adequatecontrol, certification and inspection facilities at all border checkpoints and customs entry points is aninstitutional and infrastructural deficiency that must be addressed by both countries, if necessary withrecourse to development partners’ programmes and dedicated capacity-building projects;NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT135