Nepal is among those countries in the world which have no direct contact with the sea. Such countries are called landlocked. To the north of Nepal are the Himalayas and China, while to the south, east and west are India. This is the reason why almost all the import and export of Nepal with other countries of the world goes through India. The nearest sea port of Nepal is Kolkata, which is about 1,000 km away. Apart from this, it also uses Haldia and Visakhapatnam ports. The transit treaty between India and Nepal is in force since 1960, under which Nepal can use Indian ports. This agreement was updated again with new changes in June 2023. From Raxaul, India, the goods reach Birgunj-Sirsia dry port by rail, from where they are sent all over Nepal.
India is Nepal’s largest trading partner
Nepal’s economy is largely dependent on India. About 63% of Nepal’s total trade is with India. More than half of the goods that Nepal buys from abroad come from India. At the same time, a large part of the goods that Nepal sells to other countries also goes to India. For many years, about 70% of the goods going from India to Nepal reached only through the Birgunj-Raxaul corridor.
Nepal buys not only everyday goods from India but also essential things for life. These include petrol, diesel, LPG, wheat, rice, edible oil, medicines, steel and fertilizers used in agriculture. Nepal does not have its own oil refinery, so it has to import all its fuel from outside. This is why any obstruction in trade or transit with India directly impacts the lives of the common people of Nepal.
When the road stopped in 2015, the whole of Nepal was in trouble.
The biggest example of Nepal’s dependence on India was seen in 2015. At that time, there were big demonstrations in the Terai region against the new constitution in Nepal. Due to this, the movement of trucks on the India-Nepal border was badly affected. India always maintained that it had not imposed any official blockade, but the supply of goods almost stopped.
This affected entire Nepal. The World Food Program (WFP) of the United Nations warned that the prices of food items are increasing rapidly and relief materials are not reaching the earthquake-affected areas. UNICEF said that more than 3 million children under 5 years of age were at increased risk of illness and death during winter.
There was a shortage of essential medicines for ICU in hospitals. The drug manufacturing factories did not get the raw material, so their production stopped. Due to shortage of gas and fuel, many families had to burn wood again for cooking. Due to this entire crisis, Nepal suffered an economic loss of about 5 billion dollars. This loss was considered almost equal to the loss caused by the devastating earthquake of the same year.
Can China replace India?
After the 2015 crisis, Nepal tried to increase trade with China. In 2016, both countries signed the Transit and Transport Agreement. Under this, Nepal got permission to use four sea ports of China – Tianjin, Shenzhen, Lianyungang and Zhanjiang and three dry ports. This sent a message that now Nepal has another option other than India.
But the situation on the ground is different. China’s nearest port, Tianjin, is about 3,300 km away from the Nepal border, while India’s Kolkata port is just 1,000 km away. To reach China, Nepal has to pass through difficult mountainous roads of Himalayas and Tibet.
Rasuwagadhi-Kerung border is the main route between Nepal and China, but the roads here often get closed due to landslides. Even Nepali trucks cannot go beyond Kerung. To carry goods from there one has to depend on Chinese transport companies. Many times goods remain stuck at the border for several weeks.
The most important thing is that after the agreement in 2016, not a single regular cargo of Nepal came from a third country through Chinese ports for the next seven years. For the first time, a pilot consignment reached Nepal via China in September 2023, but even today this route is almost not used for regular international trade.
Geography can’t change
Experts say that for Nepal, the election between India and China is not just a matter of politics. It is also a question of distance, geography, roads, cost and trade. At present, India is the only way through which Nepal connects with the world and procures goods for its daily needs.
Therefore, experts believe that India and Nepal should work together on modernizing Birgunj Dry Port, increasing rail connectivity to Biratnagar and Bhairahawa and further strengthening the transit system. China’s route may definitely be an alternative option in the future, but at present India is the most reliable and practical route for Nepal’s economy and trade. At present no government or policy can change this truth of geography.
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