Listen to this article:

Around six dozen tea industries in eastern Nepal are at risk of closure because India has implemented a Standard Operating Procedure (SOP) that makes quality testing for tea exported from Nepal mandatory. Tea entrepreneurs argue that the time needed to meet these new requirements has significantly raised business risks.

Although India introduced the new testing system on May 1, the issue gained wider attention a few days after Rabi Lamichhane, chairperson of the ruling Rastriya Swatantra Party and Foreign Minister Shishir Khanal visited India. It has led to questions being raised about the much-publicised “breakthrough” in bilateral relations the visit was expected to bring in.

Bilateral trade is not a matter of merely calculating profits and losses; it is also an essential requirement to maintain continuity in relations between two nations. Every country has its own trade laws and regulations, which should help both sides manage potential challenges and disadvantages. However, not all difficulties can be addressed solely by policies and rules – practical considerations must also be taken into account.

The crisis created by the India’s SOP reflects the need for such practicality. Industry stakeholders in Nepal cite the two-week time for test reports as an impracticable risk to their business since sales are not permitted during this period. And if samples fail, the tea must be destroyed or returned.

Globally, relations between countries are increasingly shaped by geo-economics, economic partnerships and trade rather than by ideology, philosophy, politics or geopolitics alone. National security remains a top priority in mutual relations, followed closely by physical infrastructure and connectivity. Over and above these, economic growth, investment and employment opportunities, trade and commerce, supply chains, monetary policy and value chains play a key role in shaping the foundation and future direction of international relations.

Also read: For Nepal’s Troubled Tea Industry, India’s Import Barriers Could Be a Death Knell

India and Nepal are not only friendly neighboring countries but major trading partners. India accounts for about 65% of Nepal’s foreign trade. It is the principal trading partner in terms of both imports and exports. Nepal’s geography, surrounded by India on three sides and sharing a difficult mountainous border with its northern neighbour, has made its trade relationship with India particularly intensive. Though China is Nepal’s second-largest trading partner in terms of imports, its export potential towards China are limited. Thus, a distant-sky neighbour, the United States, has remained our second-largest export market.

Nepal’s relationship with India is naturally close, shaped by geographical accessibility, ease of movement, shared cultural and civilisational heritage and strong people-to-people connections. This reality makes Nepal’s trade relationship with India unique. For decades, Nepal has maintained a stable exchange rate with India, which has ensured both monetary stability and trade........

© The Wire