This slide focuses on international trade at the time of transit impasse or unofficial blockade by India on Nepal and its effects on Nepalese economy.Trade or transit impasse last for 5 months on Year 2072 from month of Asoj i.e form 2015 September. In 1989/1990,there was blockade by India.

1. Nepal’s International Trade
under the Recent Transit
Impasse
Presented By: Poojan Shrestha
Neharika Kafle
Sushant Sedai(Group leader)
Nagu Bajracharya(Coordinator)
Rakshya Koirala
Saroj Manandhar
Vawana sharma
School of Management, TU
MBA 4th Semester(MBA 7th batch)

2. Nepal’s International Trade
• Nepal international trade is key source of the economic development.
• International trade before the 1950s was with countries such as India
and China esp. Tibet.
• Market-oriented economic was reformed in the early 1990s, from
where Nepal increased its integration into the world economy.
• In April 23, 2004, Nepal got the membership in WTO as first member
of LDC to enter into WTO which opens the Nepal door for global
trade.

3. Recent Transit Impasse
• Nepal finally drafted the constitution by people's representative
through the constitution assembly after the 65 years of struggle.
• India demand seven point changes on constitution according to
Indian Express.
• Madeshi political party demonstrated on border points.
• Recent Transit impasse last almost five month from 2072 Asoj 3.
Note: Data was available from begging of economic year So For data
analysis We had taken from beginning of year to the Last month of
transit impasse i.e 7 month data

4. Nepal – India: Treaties and Deviation.
• The international communities, the United Nations Secretary General, EU
have called on India to lift the obstructions of essential supplies.
• According to Law of the Sea 1982, a land-locked country gets an
unrestricted right of access to and from the sea of the nearby coastal state.
• India has deviated Article 51 of its own constitution.
• India has also deviated from session 10, Article 125 of UN convention of
law of sea
• India also deviate from the Nepal – India Transit Treaty of 1991
• India also Deviate from BBIN agreement which is yet to be implemented on
full phase.(India Proposed BBIN agreement)

5. 1989/1990 Transit impasse:
• King Birendra of Nepal proposed to make Nepal a "Zone of Peace".
• Relations between the two countries sank to a low point in 1988.
• In March 1989, upon the expiration of the 1978 treaties on trade and
transit rights, India insisted on negotiating a single unified treaty in
addition to an agreement on unauthorized trade.
• On March 23, 1989, Upon expiration of treaty closed border entry
points.
• The relationship with India was further strained in 1989 when Nepal
decoupled its rupee from the Indian rupee which previously had
circulated freely in Nepal.

6. Data Analysis
Export Import Comparison of international trade of three fiscal years
-399.56
-317.45
-514.99
50.98 38.01 42.22
450.54
355.46
557.21
-600
-400
-200
0
200
400
600
800
2071/72(shrawan- Magh) 2072/73(shrawan- Magh) 2073/74(shrawan- Magh)
USDBillion
Amount is in billion
Export Import Comparison
Trade Deficit
Export
Import

7. Nepal’s major trading partner at the time of transit
impasse and after the transit Impasse
• USD Billion
317.32
229.34
390.99
65.79 60.38
77.31
118.41
103.75
131.17
0
50
100
150
200
250
300
350
400
450
2071/72(shrawan- Magh) 2072/73(shrawan- Magh) 2073/74(shrawan- Magh)
Source: TEPC
India
China
Others

8. Comparison of total imports of major products(7 month
0
10000000
20000000
30000000
40000000
50000000
60000000
70000000
80000000
Iron & Steel and products thereofPetroleum ProductsTransport Vehicles and parts thereofMachinery and parts CerealsElectronic and Electrical EquipmentsTelecommunication Equipment and parts
F.Y. 2014/15
F.Y. 2015/16
F.Y. 2016/17

9. Comparison of total export of major products
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
Woolen Carpet Readymade Garments Iron and Steel products Cardamom Tea Juices
1 2 3 4 5 6
F.Y. 2014/15(2071/72) Shrawan -Magh
F.Y. 2015/16 (2072/73) Shrawan -Magh Value
F.Y. 2016/17 (2073/74) Shrawan -Magh Value

10. Impacts of transit Impasse on Government
Revenue
188.91
215.54
193.48
319.15
0
50
100
150
200
250
300
350
2070/71(Shrawan to Magh) 2071/72(shrawan-Magh 2072/73(shrawan -Magh) 2073/74(shrawan to magh
Government Revenue
Government Revenue
Amont is in Arba

11. 7
11.3
3.3
0
2
4
6
8
10
12
2071/72(Shrawan- Magh) 2072/73(shrawan-Magh) 2073/74(Shrawan-Magh
Inflation rate(in%)
Inflation rate(in%)
Source: NRB

12. Economic growth
3.76
5.72
2.32
0.77
0
1
2
3
4
5
6
7
2069/70 2070/71 2071/72 2072/73
GDP at basic price Annual growth rate
GDP at basic price Annual growth
rate
Source: CBS

13. Nepal’s use of diplomacy to end transit impasse:
Both political and diplomatic channel
Lacks track 2 diplomacy
Mistake of Indian diplomacy- Sitaram Yechury
Kamal Thapa Visit
Religious diplomacy

14. Government action to reduce the impact of transit impasse:
Plan to double the agriculture growth
Search for alternative sources
New trade policy launched
New trade route identification

15. Comparison with 1989/1990 transit impasse:
Shortage of Indian imports essential goods
Recent transit impasse has severe effect
International trade declines in both impasse.
Ecological destruction
People were divided in recent transit impasse

16. Positive aspects:
• Access to Chinese port ending dependency on India
• Import of oil from china
Negative aspects
• Daily loss Nrs. 2 billion.
• 400000 people out of job.
• Private sector suffers loss of Rs 202.5 billion which is 25% of that year
budget.
• Huge economic affect
• Impacts on education sector, health sector etc.

17. Major Findings:
• Imports and exports declined sharply by 21.1% and 25.4% respectively in
2072/73 of first seven months
• Trade deficit also declines by 20.55%
• India is a major trading partner of Nepal despite of transit impasse which
shows paradoxical situation of Nepal
• The transit impasse has huge impact on government revenue as
government revenue is highly dependent on custom.
• Need to diversify Trade
• Huge economic impact
Concluding remarks- Nepal should Learn from this impasse and need to
rely on herself in difficult situation.

18. Thank You