End the monopolyAround 200 cargo containers bound for Nepal are currently stuck at Kolkata port, the main freight gateway for the country’s foreign trade, due to the government’s inability to exert pressure on Indian authorities to immediately address the problem.
Around 200 cargo containers bound for Nepal are currently stuck at Kolkata port, the main freight gateway for the country’s foreign trade, due to the government’s inability to exert pressure on Indian authorities to immediately address the problem. This is not the first time Nepal-bound goods are lying stranded in Kolkata. The problem occurs more than a few times every year. It is a pity that no one seems serious about finding a long term solution to resolve it.
Nepal uses Kolkata port to bring in most of the goods from, and send most of the goods to, third countries. Since Nepal’s import volume is a lot bigger than export volume, the problem at the port generally hits importers. The Kolkata port receives around 400-600 Nepal-bound containers every week. Of these, only around 335 containers arrive at the dry port in Sirsiya, Birgunj. This delay in movement of containers has been compelling importers to pay demurrage charges, which has pushed up logistics cost.
Most of the goods that arrive at Kolkata port are loaded onto trains and dispatched to the Birgunj dry port using a dedicated railway line provided by Indian Railways. But as of now India has allowed only one company, Container Corporation of India (Concor), a government undertaking, to operate railway service. This is because the Nepal-India Rail Services Agreement clearly says Nepal cannot use trains other than those owned by state-owned Indian Railways or Concor, which is a subsidiary of Indian Railways, for movement of railway freight.
It is time that the government exerted pressure on Indian authorities to amend the railway agreement so that the monopoly of Concor, which has not been delivering quality service, could be ended. The monopoly has only added financial burden on traders who have to pay demurrage and detention charges due to the delay in movement of cargo containers from Kolkata port or from the dry port in Birgunj.
Over the years, private operators in India have expressed interest to operate railway service between Kolkata and Birgunj. Nepal must convince the Indian side to rope in these players. This will trigger competition and compel Concor to improve its service. This will resolve problems being faced by Nepali traders.
Delay in delivery of goods has long prevented Nepal from climbing the rungs of Doing Business Index of the World Bank. The latest Doing Business report says Nepal takes 61 days, on an average, to import goods, as against 8.7 days in developed countries. This has been pushing up prices of goods, stoking inflationary pressure. So, resolution of problems at Kolkata port will improve business environment in the country on the one hand, and reduce consumer prices on the other.