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With India reeling under tomato shortage, the export of Nepali tomatoes to the southern neighbor has surged dramatically in the past one month. Nepal has exported 670 tons of tomatoes to India in Shrawan (mid-July to mid-August).

The preliminary data of the Department of Customs shows tomatoes worth Rs 8.7m were exported from Nepal to India. According to traders, the shortage of tomatoes in the Indian market has increased demand for Nepali tomatoes, resulting in a sharp rise in exports. The demand for Nepali tomatoes has increased especially from border Indian cities.

The Customs Department officials said major customs offices saw a huge shipment of tomatoes from Nepal to India in the past one month, especially through Birgunj, Bhairahawa, and Kakarbhitta customs. According to Shovakant Poudel, Director General at the Customs Department, tomatoes were exported to India in high volume in the last one month. According to traders, 15-20 tons are being exported to India from Birgunj, the main custom point of the country.

Due to substantial exports of tomatoes by Nepali traders to India, the domestic markets are grappling with supply limitations, leading to significant price surges. The wholesale price of large tomatoes rose steeply by a staggering 385 percent, from Rs 35 per kg to an astonishing Rs 170 per kg.

With traders preferring exports to India, the supply of tomatoes to Kalimati Fruits and Vegetable Market has declined by 50 percent. “The supply of tomatoes has fallen to 35 tons per day from earlier 65 tons,” said Binay Shrestha, information officer at the Kalimati Fruits and Vegetable Market Development Board. According to Shrestha, the local market in Kathmandu is currently getting tomatoes from three neighboring districts—Kathmandu, Bhaktapur, and Lalitpur.

The tomato exports to India surged in the last two months as the southern neighbor experienced a shortage of tomatoes. While Nepal has been requesting India to facilitate the imports of vegetables including tomatoes, the southern neighbor has restricted the tomato imports.

However, faced with a shortage and steep price rise, India in the first week of August lifted import restrictions on tomatoes. The relaxation of quarantine rules for Nepali tomatoes will last till October 31, according to officials of the Ministry of Agriculture and Livestock Development.

Tomato production decreased in India, especially in the top 10 tomato-producing states - Andhra Pradesh, Madhya Pradesh, Karnataka, Gujarat, Odisha, West Bengal, Telangana, Chhattisgarh, Maharashtra, and Bihar, leading to a steep price rise.

Given the Indian restriction, tomatoes have never been among Nepal’s significant export items to India, despite the country’s export of various agricultural products like tea, cardamom, cabbage, and ginger. In the fiscal year 2022/23, the top three export commodities to India were refined palm oil, soybean oil, and cardamom.

However, tomato exports to India did surge in the last fiscal year to 1094 tons compared to 40 kg in 2021/22.  Interestingly, these 1094 tons of exports happened in Ashar (mid-June to mid-July), which is the last month of the Nepali fiscal year.

Nepali farmers grow tomatoes on 22,600 hectares and produce more than 432,000 tons annually, according to the Agriculture Ministry.

According to the Agriculture Ministry, Nepali farmers cultivate tomatoes across an area of over 22,000 hectares and produce over 400,000 tons annually. In 2021/22, Nepal produced 422,703 tons of tomatoes on 22,911 hectares.

However, Nepal still imports a huge quantity of tomatoes from India every year. The latest data from Customs Department shows the country imported 42,105.60 tons of tomatoes totaling Rs 610.86m in 2022/23.

Not so long ago, the government of Nepal advised the people not to opt for panic buying of grains, stating that there was enough grain stock to outlast the upcoming harvest season. 

But the ‘comfortable situation’ appears to have changed all of a sudden.  

Recently, the government of Nepal wrote to India asking for 155,000 tons of grains and sugar, stating that India's global ban on grain export may affect Nepal too.

Spokesperson at the Ministry of Industry, Commerce and Supplies, Radhika Aryal, confirmed that the government had written to the Indian government asking for the supply of 100,000 tons of rice, 50,000 tons of sugar and 5,000 tons of paddy.

“The letter has been sent to the Embassy of India in Nepal via the Ministry of Foreign Affairs but the official reply from the Indian government has not been received yet,” said Aryal.

India has imposed a ban on the export of non-Basmati rice across the globe despite objections from the international community. The export policy of non-Basmati white rice, semi milled or wholly milled rice, whether or not polished or glazed, is amended from “free to prohibited,” reads a notice from the Directorate General of Foreign Trade.

The price of rice, Nepal’s staple food, has been escalating in the domestic market right after India announced a global ban on the export of all varieties of rice, save the Basmati. The Indian ban came after Russia announced its withdrawal from the Black Sea Grain Deal in the midst of the Ukraine war, straining a war-hit supply system and aggravating the global food crisis.

The export will be allowed on the basis of permission granted by the Indian government to other countries to meet their food security needs and based on the request of their government.

Before this move, the government had been saying that there was enough gain stock to last three months after which a new harvest season will begin. Despite the government’s assurance, panic buying has been going unabated and the traders have been making hay. As for sugar, the government has said domestic production was not enough to meet the demand.

In 2016, Nepal-India relations were at one of their all time lows because of India’s economic blockade. The then Minister for Foreign Affairs, Kamal Thapa, frequently traveled to India to convince the Indian side to lift the blockade which had severely affected life in Nepal.

In one of the meetings with his Indian counterpart, Sushma Swaraj, Thapa had proposed forming a panel on Nepal-India Eminent Persons’ Group (EPG), as agreed by the two countries in 2014, to seek experts’ suggestions to settle the long-standing issues between Nepal and India, including the revision of the 1960 Treaty of Peace and Friendship to reflect the present day realities.

Former foreign minister Thapa shared such information while speaking at a program organized by Tanka Prasad Acharya Memorial Foundation on Friday.

Initially, recalls Thapa, Swaraj was reluctant to form such a panel as the bilateral ties between the two countries were going through a rocky patch, but she agreed eventually. The Nepali side announced its EPG members, all of them picked by Thapa without consulting major political parties and stakeholders.

The names were endorsed by the Cabinet of Prime Minister KP Sharma Oli. Former Nepali ambassador to India, Nilambar Acharya, remembers Thapa calling him one evening and asking him to become an EPG member. Acharya asked Thapa for some time to think about the offer, but the latter insisted that the decision had to be made right then and there.

Though it was an expert panel, there were no experts representing the Nepali Congress, CPN (Maoist Center) and Madhes-based parties. Still, the non-represented parties had no issue with the formation of the EPG, as most of the members were non-political figures. The only politician in the EPG, Nepal, was Rajan Bhattarai of the CPN-UML. From India, it was Bhagat Singh Koshiyari of the Bharatiya Janata Party.

In 2018, the EPG prepared its report with its suggestions to the governments of Nepal and India. But Indian Prime Minister Narendra Modi refused to receive the report. This turndown essentially halted the progress of the EPG report.  During his India visit in May this year, Prime Minister Pushpa Kamal Dahal did not raise the EPG issue with Prime Minister Modi lest it should spoil the improving relationship between Nepal and India.

Former Prime Minister and UML leader Oli is probably the only leader who has been consistently and publicly speaking about the importance of the EPG report. Other political parties, mainly the NC and Maoist, seem to have no interest in the issue. 

In a public program on Saturday, Oli said that the Nepal-India relations should move ahead “as per the suggestions provided by the EPG report.” He said the report will serve as a prescription to push forward the ties between the two countries.

It has been more than five years since the EPG report was prepared, and the chances of it moving ahead are slim. Already, discussions have begun on what to do with the report.  Thapa, the former foreign minister, has suggested that members submit the report to Nepali side and close the chapter on the whole issue. As the report has already submitted its report to the Ministry of Foreign Affairs, Nepal, it can be argued that the EPG has no legal existence.  

There are some people who are demanding that the report must be made public at least, if the two governments are not ready to receive it. EPG Nepal coordinator Thapa says he holds the key to the cupboard where the report has been stored and he has been trying to hand it over to the Ministry of Foreign Affairs.

He adds being the keeper of the report has become a huge burden for him.There are multiple reasons behind the sorry state of the EPG report. First one, obviously, is the composition of the EPG without representations from major political parties.

 But there are those who argue that since the EPG was a panel of experts, there was no need for a party-wise representation. The only thing lacking, they say, is the consensus of parties and involvement of major political actors. The NC, Maoists and Madhes-based parties are not willing to take ownership of the EPG report.

It should also be noted that the Indian side was never in favor of forming a panel for the purpose of, among other things, suggesting revision to the 1950 Peace and Friendship Treaty. Several issues that the EPG was dealing with were heavily politicized.

Experts reiterate that there should be a national consensus for the EPG report to move ahead.

Though the report is yet to be made public, the Indian side has expressed dissatisfaction over some provisions that were leaked through the media.

The document has recommended establishing smart borders in order to limit the seamless cross-border movement. In 2018, The Wire reported:  “EPG has suggested that a technology-driven structure should be put in place for monitoring the movement along the international boundary, with identity cards as the mode of registration.”

Another point that the Nepal side has proposed is ensuring full independence to purchase arms and ammunition from third countries. To this end, Nepal is intending to change the Article 5 of Treaty which says: “The Government of Nepal shall be free to import from or through the territory of India, arms, ammunition or war-like materials and equipment necessary for the security of Nepal.”

This provision provides full right to Nepal to import arms but protocol to the Nepal-India Treaty of Transit states that “arms, ammunition and hazardous cargo shall not be allowed to be transported by road.” Similarly, Nepal-India Railway Agreement is not sufficient to allow the transit of arms and ammunition from India, experts say.

Similarly, the letter of exchange to this treaty bars Nepal’s independent right to import arms and ammunition from India. The paragraph-2 of Letter of Exchange says: “Any arms, ammunition or war-like material and equipment necessary for the security of Nepal that the Government of Nepal may import through the territory of India shall be so imported with the assistance and agreement of the government of India.

 The government of India will take steps for the smooth and expeditious transport of such arms and ammunition through India.” Nepal prefers to scrap both Article 5 and Letter of Exchange with a view that it is fully independent to import arms and other equipment as per its need.

 The 2007 India-Bhutan Friendship Treaty had also changed a similar clause in the 1949 version. The new treaty says that Bhutan can import arms as long as Indian interests are not harmed and there is no re-export of the weapons, either by the government or individuals.

Article 6 and 7 in the current treaty encompass the issue of “national treatment” and equal privileges for citizens on each other’s soil. While the spirit has been preserved to an extent, the EPG members have apparently backed Nepal’s position that the Himalayan republic should be able to institute more protection for its own citizens due to the asymmetry in size and economy between the two neighbors.

Nepal is of the view that such provisions are disadvantageous to a small country like Nepal, and given its population, economy and size, it cannot offer equal treatment to Indian citizens in Nepal.  Another bone of contention between the two countries is Article 2 of the treaty that states: “The two governments hereby undertake to inform each other of any serious frictions or misunderstanding with any neighboring state likely to cause any breach in the friendly relations subsisting between the two governments.” 

 Nepal is of the view that as this provision is not implemented, it is better to scrap. There has been war between India and Pakistan and India and China since the signing of the treaty, but India has not informed Nepal of the tensions.  Similarly, there has not been any military alliances between the two countries. 

Academicians and policy-makers in New Delhi say that India sought Nepal’s favor when there was Doklam crisis in 2017, and Nepal may be asked to take side by India if there is escalating tensions between two countries in coming days. Since the 1962 China-India war, Nepal has maintained a neutral position vis-à-vis India-China conflict and war.

 Along with these key provisions, Nepal has proposed to make changes in several other provisions of bilateral treaties and agreements in trade, transit and other areas, but Nepal’s major concern is the 1950 treaty. 

The main purpose behind the formation of EPG was to suggest ways on how to amend the treaty. There are also views on whether it was prudent to form a panel like the EPG to deal with sensitive issues between two countries.

 Some experts say the two countries should have instead formed government-level mechanisms to work out the outstanding issues, which they can still do with national political consensus. 

As the youths are leaving abroad for foreign jobs and the land plots in the rural areas are left barren, the country has imported millet worth Rs 513 million in the last fiscal year from India.

In the fiscal year 2079/80 BS, millet import reached Rs 513 million from Kakadbhitta customs point.

According to the Information Officer at the Plant Quarantine Office in Kakadbhitta Chandra Kishor Thakur, a total of 16,035 metric tons of millet was imported from Kakadbhitta customs point.

Likewise, pumpkins worth Rs 57.7 million were imported from India in the last fiscal year from Kakadbhitta customs point, according to Thakur.

Similarly, chilly worth almost Rs 200 million was imported from Kakadbhitta customs point in the fiscal year 2079/80 BS, Thakur said. 

Thakur said that fruits and vegetables including onion, tomato, long guard, yam, watermelon, ginger and others worth billions were imported during the time from India.

However, the local producers in the eastern districts have complained of limited market for the domestic products due to unrestricted imports of vegetables and fruits from India and other countries.