In coming weeks, officials from Nepal and India will once again sit across the table to take stock of the transit and trade arrangements that quietly underpin our two economies. The 2023 revision of the Treaty of Trade and Transit renewed the framework that has governed our commercial relationship since 1960, and the Nov 2025 Letter of Exchange opened rail cargo movement through Jogbani-Biratnagar and Nautanwa—a step that culminated, this July, in the first commercial freight train between our two countries.
For a landlocked country whose entire external trade depends on India and Indian infrastructure, this is not a small thing. It reflects a considered, positive choice by India to expand multimodal access for its neighbor, and Nepal should say so plainly and often, including at the negotiating table itself. That said, our shared experience also teaches us that infrastructure, however welcome, does not by itself guarantee continuity. Transit between our countries has, at times in the past, been affected by broader shifts in the political relationship—most notably 1989 and 2015 border blockades—and those episodes left an institutional memory that still shapes how each new negotiation is approached.
Both sides would benefit from treaty language that formally separates the day-to-day movement of goods from the broader ups and downs of bilateral relations. A standing commitment that transit continues uninterrupted, regardless of the political environment, would be of great value to traders on both sides of the border, and it is squarely in India's own commercial interest as well, since Indian ports, railways and transporters also depend on predictable Nepal-bound volumes.
Nepal’s request for special consideration is not made in isolation; it draws on principles India has itself endorsed, including the freedom-of-transit provisions of the WTO Trade Facilitation Agreement. We would respectfully ask that this recognition be reflected more explicitly in treaty language—through waived or reduced transit fees, priority processing lanes, and other forms of non-reciprocal facilitation appropriate to a Least Developed, landlocked country. It is evident that Bangladesh and Bhutan face comparable circumstances, and Nepal would welcome the opportunity to raise transit facilitation within SAARC and BBIN forums as a matter of regional connectivity rather than a bilateral concession extracted from India alone.
Nepal should address India’s legitimate security concerns—the risk of smuggling, dual-use goods, and third-country transshipment through Nepal is real, and Nepal has every interest in being seen as a reliable, transparent partner on these questions. At the same time, Nepali traders sometimes experience security-related inspection as slower and less predictable than the underlying risk would seem to warrant, and we would welcome a joint effort to make that process more transparent for everyone.
A joint risk-management framework—built around pre-arrival manifest sharing, mutual recognition of Authorised Economic Operator status, and scanner-based rather than physical inspection wherever possible—could serve both goals at once. The World Customs Organization’s SAFE Framework, with its green/amber/red channel approach based on a trader’s compliance history, is a proven international model that neither side would need to invent from scratch, and Nepal would be glad to work with India in adapting it to our shared border.
The Nov 2025 Letter of Exchange represented genuine progress toward strengthening multimodal connectivity between the ports of Kolkata and Visakhapatnam and Nepal’s customs yards, and we would encourage both sides to treat full implementation—not merely announcement—as the shared benchmark of success. Road transport remains dominant, costly and comparatively slow, and there is meaningful room to develop river and inland waterway routes along the Ganga for bulky, lower-value cargo such as fertilizer, coal and construction material, provided both sides are willing to invest in the terminal infrastructure such routes require.
We would also encourage continued development of single-window logistics parks at Birgunj, Biratnagar and Bhairahawa, co-locating rail sidings, customs processing and warehousing so that cargo can move from one mode to the next without unnecessary handling. We understand that regional research institutions are already tracking this evolution closely, and we would welcome their analysis being drawn on during negotiation preparation.
Nepal’s access to Bangladesh, Bhutan and Southeast Asia runs, in practice, through Indian territory, and we would value seeing third-country transit rights formalised as a standing annual entitlement rather than something renewed case by case. We recognize that the BBIN Motor Vehicles Agreement has been paused since Bhutan’s withdrawal in 2017, and we would encourage both India and Nepal to explore whether a trilateral arrangement—proceeding without Bhutan for now, should Bhutan continue to prefer not to participate—might allow this initiative to move forward rather than remain indefinitely on hold.
A great deal of the friction our members describe day to day is not about large policy questions at all, but about paper. Manual, paper-based customs procedures create delay and, at times, opportunities for informal payments that neither government wants to see continue. We would welcome full digitalisation—electronic cargo tracking through RFID or GPS-sealed containers, a single electronic window, and e-payment of duties—alongside genuine interoperability between India’s ICEGATE system and Nepal’s ASYCUDA platform, which today remain largely unlinked despite both being sophisticated systems in their own right.
Harmonising the documentation required at each checkpoint down to WTO Trade Facilitation Agreement minimum standards, together with mutual recognition of Nepal-issued documents, would directly address one of the most common complaints we hear. We would also welcome joint capacity-building and training programmes for customs and logistics personnel on the Nepali side, which we believe would meaningfully reduce error-driven delay for both countries.
On the ground, our Integrated Check Posts remain unevenly developed, and congestion at Birgunj—which alone handles somewhere in the range of sixty to seventy percent of Nepal’s trade—has become especially acute. We see the recent commercial activation of the Jogbani-Biratnagar rail link as an important and welcome opportunity to relieve that pressure, and we would encourage continued investment in completing and upgrading the remaining ICPs with rail sidings, modern scanning equipment, cold storage and adequate parking.
We would also ask that consideration be given, over time, to extending cross-border rail connectivity further into the Kathmandu Valley, building on the broad-gauge line that already exists between Raxaul and Birgunj; we understand this remains a longer-term and more aspirational goal, and we raise it as such. In the nearer term, dedicated cargo lanes separated from passenger and local traffic at key road crossings such as Raxaul-Birgunj would help address a bottleneck that is physical rather than procedural, and therefore, we believe, more straightforward to resolve.
Nepali traders continue to bear significant port and container detention charges and demurrage at Kolkata and Vishakhapatnam when shipments are delayed, and we understand and appreciate that rail cargo is expected, over time, to reduce these costs and improve reliability—a conclusion we understand Nepal’s own Foreign Ministry shares. We would encourage both governments to pursue the full-scale rollout of rail cargo rather than treating it as a limited pilot.
We would also welcome a jointly commissioned time-release study, following World Customs Organization methodology, to identify and remove redundant steps at each checkpoint along the corridor—an approach that has been used successfully by ASEAN member states and that we believe could offer real, measurable savings here as well. Standardising and publishing fee schedules, together with a move toward e-payment, would further help reduce both cost and the risk of informal facilitation payments, which serve the interests of neither government.
Ocean freight into Kolkata and Vishakhapatnam serving Nepal-bound cargo is often quoted at rates that appear high relative to comparable regional routes, and the basis for those rates is not always transparent to Nepali shippers.
Ancillary charges—bunker and currency adjustment factors, terminal handling charges, documentation fees, equipment imbalance and peak season surcharges—are sometimes applied inconsistently and stacked without clear justification, and this is compounded by the fact that Nepal-bound cargo, by virtue of longer transit and dwell times inherent to landlocked transit, is particularly exposed to container detention and demurrage charges. Because these charges are often billed in US dollars, Nepali traders also carry exchange-rate risk on top of the charges themselves.
We recognize that shipping lines and private transporters are commercial actors, and that neither the Indian nor the Nepali government can or should attempt to fix their prices directly. Our request is therefore not for price controls, but for transparency: a jointly reviewed, publicly disclosed schedule of ancillary charges for Nepal-bound cargo, consistent with the advance-disclosure norms already recommended by UNCTAD and FIATA; a longer free-time allowance appropriate to landlocked-destination cargo, along with pre-clearance and pre-positioning of containers where feasible; and exploration of INR-denominated billing or rate-lock options to reduce currency exposure for defined periods.
We believe India, with its regulatory authority over shipping lines operating from its ports, is well placed to encourage this kind of disclosure, and that doing so aligns with international best practice rather than requiring any one-sided concession.
In a similar spirit, charges at Kolkata, Haldia and Vishakhapatnam for handling, storage and wharfage vary with season and congestion in ways that make cost planning difficult for Nepali traders. We would welcome a fixed, published tariff schedule specifically for Nepal transit cargo, agreed through the Inter-Governmental Sub-Committee and valid for a defined period such as a year, along with a reasonable grace period or charge waiver where delays are attributable to processing on the Indian side rather than to the trader. We would also ask for advance notice—perhaps sixty to ninety days—ahead of any revision to port tariffs affecting Nepal transit cargo, since predictability matters to business planning as much as the rate itself.
Within India, road freight rates to the Nepal border fluctuate with fuel prices and local market conditions, and we are aware—and raise this respectfully and without any wish to level an accusation—that informal levies along some transport corridors have long been a documented concern among Nepali traders. We would welcome encouragement of competitive, registered-transporter panels and the publication of indicative rate bands.
On rail, as the Jogbani-Biratnagar and Raxaul-Birgunj links grow in importance, we would value advance consultation with Nepal before tariff revisions, given how central predictable rail pricing is to Nepal realising the cost savings this new mode promises. More broadly, a jointly maintained dashboard of current rates and transit times across road, rail and multimodal options would help our traders choose the most efficient route for their cargo, and would, we believe, also build the kind of mutual transparency and trust that benefits both countries over time.
Several of the issues above—particularly freight, port and transport charges—touch on matters that are commercially sensitive and only partly within either government's direct control. Our preference, and our respectful suggestion for how this negotiation might proceed most productively, is to frame these as requests for transparency and predictability rather than as accusations of overcharging, and to anchor them wherever possible in existing international norms rather than presenting them as one-sided Nepali demands.
We believe joint monitoring mechanisms—observatories, review committees, shared dashboards—are likely to be more readily agreeable to India than fixed price caps, and that tying these requests to mutual benefit, such as the value of predictable cargo volumes for Indian ports and railways planning their own capacity, will serve both sides well.
Nepal approaches this negotiation with genuine appreciation for the progress already made and genuine confidence that further progress is possible. The core issue we hope to see addressed is, in our respectful view, less technical than structural: transit has, at points in the past, proven vulnerable to shifts in the broader political relationship and to inspection processes that are not always experienced as predictable.
It is imperative to give priority to locking in durable guarantees—treaty language insulating transit from politics, standing third-country transit rights, and published, dependable fee and documentation schedules—alongside the continued infrastructure investment that has already brought such welcome results. Infrastructure and institutional guarantees are, we believe, most powerful together; each strengthens the value of the other. The traders and businesses do not ask for special favour. They ask, simply, for a border that behaves consistently—in a good year and in a difficult one.
The author is Secretary General of the Nepal India Chambers of Commerce and Industry
