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Published on Jan 29, 2020
Should India be concerned about Nepal China transit protocol

On 1 February  2020, the historic Nepal-China Transit protocol will come into effect, ending Nepal’s reliance on India for international trade and in turn embracing the “Closer” neighbour China for third country trade.

This agreement was signed on 29 April 2019’, during the visit of the Nepali President Bidhya Devi Bhandari to China to attend the second Belt and Road Forum for International Cooperation. Ten months after completing  the domestic legal procedures, Beijing has finally notified Kathmandu on putting this agreement into effect. This protocol will enable Kathmandu an access to Beijing’s four Seaports in Tianjin, Shenzhen, Lianyungang and Zhanjiang and three dry ports in Lanzhou, Lhasa and Xigatse for third country trade.

Traditionally, Nepal has transported goods to and fro, with the third countries via the Kolkata port. The transit treaty between Nepal and India was signed in 1978 and it was renewed in 2013. However, in 1989 India imposed a fifteen month long economic blockade on Nepal denying access to Kolkata port facilities as Nepal tried to buy anti-aircraft guns from China.

Fast forward to twenty-six years later, India imposed another set of economic sanctions on Nepal heavily affecting the different sectors of the Nepalese economy. It was done on the grounds of non-inclusion of the minority communities – Madhesi and Janjati – in the new constitution of Nepal. These communities are said to have close cultural ties with India and particularly with the states of Bihar and Uttar Pradesh. The new citizenship law deprived the children of these communities from  acquiring Nepalese citizenship.

For many in Nepal, its “India-Locked” status has given New Delhi leverage over Kathmandu, resulting in a search for an alternate solution via Chinese routes. However, the Nepal China Transit Protocol may not be the wisest solution for Kathmandu to adopt. There are three major challenges Nepal will face.

First, the language barrier and the efforts by the Chinese to penetrate Mandarin courses in Nepal. Some Nepali experts have expressed unease over the Chinese plans of getting around hundred Mandarin lăoshī (teachers) to Nepal. Furthermore, some private and public schools in Nepal have made Mandarin studies compulsory for the locals. Shrestha, a former member of Nepal’s National Human Rights Commission stated “China is trying to popularize the Chinese language, which has long-term implications for Nepal.”

Secondly, this protocol will cause a threefold increase in the trading distance from before. The distance between Birgunj and Tianjin (the closest seaport of China) is 3,300 km and the distance between Birgunj and Kolkata is around 750 km. Henceforth, traders will only be attracted “towards trade through China only if procedural hurdles are eased for cargo movement to and from the ports opened by China for Nepali traders,” said, Purushottam Ojha, former commerce secretary.

Thirdly, due to tough geographical features such as rugged terrain and numerous rivers, Nepal suffers from poor transportation and communication system. On the other hand, China has a very well equipped transportation system with good roads. In fact, Nepali imports from China has not seen a remarkable growth due to inadequate infrastructure on Nepal’s side.

What lies ahead for India? For the greater strategic interest of India and for the betterment of India- Nepal bilateral relations, there are certain efforts that New Delhi must undertake. Improvise on the congestion and inefficiency in the Kolkata port and provide adequate facilities within that port. Certain unnecessary restrictions are prevalent on road transit which New Delhi should look into. Original customs transit declaration (CTD), bill of lading, invoice, packing list, import license (whenever issued) and letter of credit (certified by Consulate General) are mandatory requirement of submission at the Kolkata Port. Excessive inspections and documentation could rather act against India instead of aiding the entire process. Furthermore, housing and handling facilities at the border are other such facilities which have been given insufficient attention.

Lastly, there are two different rail agencies looking after the movement of transit goods from Kolkata to Birgunj. The Container Corporation of India (CONCOR) - a navratna public sector undertaking under the  Ministry of Railways – operating container trains and the Indian Railways, managing the movement of trains, arranging for the availability of locomotives, wagons, rakes and rolling stock, and deciding the freight rate. The delay in the movement of train takes place due to the absence of a fixed schedule as well as the unscheduled restrictions imposed by the Indian railways to manage the congestion.

This is a testing time period for India –Nepal relations as the bilateral relations between China and Nepal is entering a new phase. Belt and Road initiative has been an essential opportunity for China to take its relations with the South Asian nations to a distinct level. Thus, it becomes important for India to revive its civilizational relations and to prioritise the only genuine way ahead – Neighbourhood First.

The author is a research intern at Observer Research Foundation.
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