Nepal and Bangladesh share a historical past of goodwill, with diplomatic ties stretching again to 1972.[1] Regardless of their shut geographic proximity, separated by a mere 22-kilometer stretch of Indian territory generally known as the “Siliguri Hall,” their financial relationship has remained a fraction of its true potential. For too lengthy, bilateral commerce has been hindered by an online of bureaucratic, infrastructural, and regulatory challenges, stopping it from flourishing. The time has come for each nations to maneuver past the standard narrative and embrace a deeper, extra dynamic partnership constructed on financial integration.
The present state of commerce displays this untapped potential. Within the fiscal 12 months 2022-2023, the full commerce quantity hovered round a modest USD 49 million. The stability is closely skewed in Bangladesh’s favor, with its exports to Nepal, together with prescribed drugs, readymade clothes, and jute merchandise, valued at roughly USD 44.33 million. In stark distinction, Nepal’s exports to Bangladesh, that are primarily agricultural items like lentils, spices, and medicinal herbs, amounted to a mere USD 4.34 million.
The Roadblocks to a Thriving Partnership
The explanations for this commerce imbalance are quite a few and had been a central theme of latest roundtable dialogues in Kathmandu and Dhaka co-organized by the Centre for Coverage Dialogue (CPD) and Nepal Financial Discussion board (NEF), which introduced collectively policymakers and specialists from each nations.
A serious barrier is the excessive tariffs and different duties and prices (ODCs) levied on Nepali items by Bangladesh. As a report from South Asia Watch on Commerce, Economics and Atmosphere (SAWTEE) famous, these tariff and para-tariff obstacles are the first constraint on Nepal’s exports. A proposed Preferential Commerce Settlement (PTA) is being negotiated to handle this, nevertheless it faces its personal hurdles. As an illustration, Nepal is looking for concessions on 75 merchandise, whereas Bangladesh has to date solely supplied a preferential price on 20.7% of them. The negotiations are additional sophisticated by a geopolitical problem: any concessions Nepal grants should even be prolonged to India.[2]
Past tariffs, logistics and infrastructure pose a formidable problem. The dearth of direct connectivity between the 2 international locations signifies that most commerce should go by India, which provides vital time and value to transactions. Whereas a transit route through the Kakarbhitta-Phulbari-Banglabandha hall exists, it’s underutilized as a consequence of cumbersome border procedures. This has led to an astonishingly excessive buying and selling price for Nepal, which stands at an estimated 270%. Merely put, inefficient infrastructure makes commerce costly and gradual, hindering its development.
Unlocking the Potential: New Avenues for Collaboration
Regardless of these challenges, the outlook is much from bleak. The conversations between specialists, together with these from the Nepal Improvement Analysis Institute (NDRI), CPD, NEF, and SAWTEE, underscore the immense alternatives that lie forward.
The one largest game-changer is energy commerce. Nepal, a land wealthy in hydropower potential, and Bangladesh, a nation with a quickly rising vitality demand, are good companions. A pilot undertaking to export 40 MW of electrical energy from Nepal to Bangladesh is already within the works, however the long-term aim is rather more formidable.[3] With a goal of buying and selling 9,000 MW by 2040, a full-fledged energy commerce settlement couldn’t solely meet Bangladesh’s vitality wants but additionally present a steady, long-term income for Nepal.
Diversification of merchandise and industries is one other key space. The present commerce basket is slim, however each nations have merchandise with vital untapped export potential. Nepal might improve its exports of high-value agricultural merchandise like giant cardamom and ginger, in addition to industrial items like palm oil and yarn. Bangladesh, in flip, might discover investments in Nepal, notably in sectors that complement its personal strengths, such because the garment business. A strategic partnership might see Bangladeshi corporations spend money on Nepal to make the most of its ample hydropower for manufacturing, making a joint industrial worth chain.
Enhanced connectivity and people-to-people exchanges are additionally important. Whereas bodily transit stays a difficulty, each international locations can capitalize on different types of connectivity.[4] Growing the variety of flights between Dhaka and Kathmandu from the present 13 per week would enhance tourism and enterprise exchanges. There’s additionally immense potential for instructional exchanges, with many Nepali college students already finding out medication and engineering in Bangladesh, and a rising alternative for Bangladeshi college students to pursue levels in hospitality and administration in Nepal. Digital finance presents one other new frontier, with discussions round cross-border cost platforms to ease enterprise and tourism transactions.
Local weather Change Cooperation is a brand new and essential space of collaboration. Nepal, with its experience in mountain ecosystems and community-based adaptation methods, can accomplice with Bangladesh, a rustic dealing with vital local weather dangers in its delta area. By conducting collaborative analysis and presenting a unified place at worldwide boards like Convention of the Events (COP) summits, the 2 nations can’t solely tackle the impacts of local weather change of their respective areas but additionally place themselves as leaders in local weather resilience and adaptation on the worldwide stage.
A Shared Path to Prosperity
As each Nepal and Bangladesh put together to graduate from Least Developed Nation (LDC) standing within the coming years, the character of their relationship will naturally shift from assist to commerce and funding. This transition presents an ideal alternative to maneuver previous political hurdles and concentrate on financial integration, as urged by H.E. Mr. Ghanshyam Bhandari, the Ambassador of Nepal to Bangladesh.[5]
The coverage suggestions from the roundtable are clear: finalize a significant PTA that addresses ODCs, improve infrastructure and logistics, and have interaction with India to seek out higher transit options. By working collectively on these fronts, Nepal and Bangladesh can construct a dynamic financial partnership that not solely advantages their very own folks but additionally contributes to the larger prosperity of the South Asian area. It’s a partnership based mostly not simply on shared historical past and tradition, however on a shared imaginative and prescient for a extra affluent future.
Dr. Shikha Thapa Magar is a Nepal-based sustainable agriculture knowledgeable and Govt Director at NDRI, holding a Ph.D. in Agronomy from Hebei Agricultural College. Her work spans climate-smart agriculture, worth chains, gender-responsive local weather motion, and catastrophe danger administration, with management roles throughout initiatives supported by UN Girls, ICIMOD, Sensible Motion Consulting, and the SCOLAR Community. She additionally serves as an Adjunct Assistant Professor at HICAST, a peer reviewer for worldwide journals, and a member of the NRNA Agriculture Committee, bridging analysis, area observe, and coverage.
