Arya News - Nepali exporters say Indian restrictions on jute and steel imports have affected their businesses, while Indian manufacturers have argued that imports have hurt domestic production, prompting New Delhi to introduce protection measures.
KATHMANDU – Nepal made a special request to India to remove obstacles to the export of jute and steel products during the Nepal-India Inter-Governmental Sub-Committee on Trade, Transit, and Cooperation to Combat Unauthorised Trade held in New Delhi last week.
Nepal’s steel exports saw a 62.43 percent decline in the last fiscal year following New Delhi’s imposition of safeguard duties. According to the Trade and Export Promotion Centre, Nepal exported iron and steel worth Rs6.14 billion in the last fiscal year, down from Rs16.35 billion in the previous fiscal year.
The decline translates into a loss of more than Rs10 billion in export earnings in a year, with potential implications for government revenue and employment.
The two-day meeting, led by Buddha Bahadur Gurung, joint secretary at the Ministry of Industry, Commerce and Supplies, ended in New Delhi on September 17. The Indian delegation was led by Ujjwal Kumar Ghosh, joint secretary at the Department of Commerce.
On Friday, the Ministry of Industry, Commerce and Supplies issued a statement saying that Nepal had requested the Indian government to remove obstacles to the export of jute and steel products.
Gurung said the Indian side had clarified that trade-remedy measures are governed by statutory and quasi-judicial investigative processes and sought all relevant information from Nepal for consideration by the Directorate General of Trade Remedies.
“It will require further technical discussion bilaterally to move ahead,” Gurung told the Post. “Both sides discussed conducting joint technical meetings in different phases to move forward. It might take time to resolve the obstacles.”
Nepali exporters say Indian restrictions on jute and steel imports have affected their businesses, while Indian manufacturers have argued that imports have hurt domestic production, prompting New Delhi to introduce protection measures.
In December last year, India imposed a three-year safeguard duty ranging from 11 percent to 12 percent on selected steel products to curb cheap imports. The levy stands at 12 percent in the first year, 11.5 percent in the second year and 11 percent in the third year. The measure applies to imports from China, Vietnam and Nepal. Specialty steel products, including stainless steel, are exempt.
India, the world’s second-largest crude steel producer, approved the three-year safeguard duty after the Directorate General of Trade Remedies, under the federal trade ministry, recommended the measure in its final findings. Before introducing the safeguard duty in December, India had imposed a temporary 12 percent tariff for 200 days in April.
According to manufacturers, Nepal’s exports mainly consist of flat-rolled iron and non-alloy steel products wider than 600 mm and between 1 mm and 3 mm in thickness. These cold-reduced steel coils are widely used in the manufacture of automobile panels, electrical appliances, furniture and general fabrication.
Nepal also exports rolled iron and steel products coated with aluminium-zinc alloys, plastic-coated iron and steel sheets, and stainless steel tableware, kitchenware and household articles.
Nepali manufacturers argue that applying the safeguard duty to Nepal is unjustified, as it remains a least developed country with high economic and environmental vulnerabilities. They say the tariff has significantly disrupted production and exports.
Nepal’s steel exports have traditionally been dominated by zinc sheets, with India serving as the principal export market.
India has also held up renewal of the Indian Bureau of Standards certificate for the past two months, according to domestic manufacturers and exporters.
“Our BIS certificate expired in June and we immediately applied to acquire it, but our application has been put on hold,” said Sunil Manot, chief finance officer of Hulas Steel Industries, one of Nepal’s largest steel manufacturers.
He said that with exports on hold, the factory’s production capacity has been reduced to 20 percent, negatively affecting investment and increasing the cost of production.
India had imposed a 12.5 percent countervailing duty on Nepali readymade jute products. It later removed the countervailing duty but imposed anti-dumping charges of 2 to 4 percent on Nepali readymade jute products.
During the meeting, Nepal also made a special request to remove obstacles to the export of jute products to India.
Nepal also focused on including agricultural products in India’s plant quarantine order, as agreed earlier.
The Nepali delegation called for a conclusion to the proposed draft of the Letter of Exchange and for activating cooperation through existing mechanisms.
Both sides requested reciprocal market access for agricultural products and bilateral approval of laboratories.
The Nepal side also raised the issue of easing the supply of petroleum and other essential products.
“The IGSC meeting has opened a door for the review of the Nepal-India Trade Treaty. A technical committee will be formed within six months, and both sides will exchange nominations for the committee to review the scope and identify issues that need to be revised,” Gurung said.
Nepal has been seeking a review of the trade treaty to address various issues in a timely manner.
Gurung said Nepal had requested India to ease the process for private and commercial vehicles entering India.
“The Indian side is positive about incorporating and facilitating it,” he said.
“We requested security for cargo vehicles coming to Nepal via the Indian land route. The Indian side said that if incidents are reported immediately with evidence, it will provide protection,” Gurung said.
The two ports provided to Nepal—Kolkata and Visakhapatnam—are congested, and Nepal has been requesting access to additional ports. According to Gurung, the Indian side said the request is under consideration by the relevant agency.
Nepal also requested alternative routes through India if obstacles affect supplies to Nepal. India has asked Nepal to identify specific routes, according to Gurung.
According to a statement issued by the Press Information Bureau of India, the two sides also discussed strengthening customs cooperation and trade facilitation, including the pre-arrival exchange of information, electronic verification of Certificates of Origin, customs automation and digitalisation.
The discussions focused on facilitating legitimate trade while strengthening mechanisms to ensure compliance with applicable rules and prevent misuse of preferential trade arrangements.
Transit and connectivity also constituted an important part of the discussions. Both sides reviewed rail and road connectivity, the movement of freight, Integrated Check Posts and land-port infrastructure. The discussions also focused on improving the utilisation of existing infrastructure and addressing operational bottlenecks affecting bilateral and transit trade.
The IGSC is an important bilateral institutional mechanism for detailed examination of trade and trade-related issues and for facilitating bilateral trade and transit.
India is Nepal’s largest trading partner, accounting for more than 60 percent of its total trade. Bilateral trade reached more than Rs1.46 trillion in the last fiscal year 2025-26, with the trade deficit ballooning to Rs951.95 billion.
Nepal’s imports from India increased by 13.01 percent to Rs1.21 trillion during the review period. Nepal mainly imports mineral fuels, iron and steel, mechanical appliances, automobiles and cereals.
Nepal’s exports to India increased by 15.12 percent, mainly due to a sharp rise in exports of edible oil, which Nepal does not produce in sufficient quantities.
Nepal exported goods worth Rs258.65 billion in the last fiscal year, with refined soybean, palm and sunflower oil accounting for 57.59 percent of total exports. Nepal exported refined edible oil worth Rs148.96 billion during the year.
Besides edible oil, Nepal mainly exported coffee, tea and spices; fibres, textile yarn and fabrics; articles of wood; vegetables, fruit and nuts; food-industry residues and waste; and prepared animal fodder.
The Indian side has asked Nepal to facilitate market access for its agricultural, medicinal and dairy products, as well as customs facilitation and issues related to industrial property rights.