Pandemic Reopens Contentious Issues in Nepal-India Ties : vi

The COVID-19 pandemic has highlighted two features of the Nepal-India economic relationship: Nepal’s ballooning trade deficit, and unrestricted cross-border movement of people of both countries. Attributing the trade deficit entirely to supply-side constraints is neither accurate nor conducive to the overall health of the relationship. This brief suggests ways towards more sustainable trade relations between India and Nepal, among them, India relaxing the non-tariff measures it imposes on Nepali goods, Nepal improving its quality testing infrastructure, and a revision to the bilateral trade treaty. The brief points to the economic and security hazards of a porous border and argues that regulating it will be in both countries’ long-term interest. It highlights the need for a resolution to the territorial disputes between the two, and strict non-interference by both in each other’s internal affairs.

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