The government has initiated the process of opening a consul general’s office in Visakhapatman to facilitate Nepali traders importing or exporting goods via the Indian state of Andhra Pradesh.

The opening of the consulate in Visakhapatman was one of the agendas discussed during the fourth Nepal-India Joint Commission meeting, which concluded in the Indian capital of New Delhi on Thursday, according to Ministry of Commerce Joint Secretary Rabi Shankar Sainju.

“India has taken our request positively and has agreed to facilitate the matter,” said Sainju, who is also the spokesperson of the ministry. “We’ll now have to formally send a letter to India via the Ministry of Foreign Affairs.” Nepal already has a consul general’s office in Kolkata, from where it is conducting its third-country trade.

To expedite the process of opening the consulate and thrash out other contentious issues regarding third-country trade via Visakhapatman, the government is mulling over holding Inter-Governmental Committee (IGC) meeting, which is led by commerce secretaries of Nepal and India, in January or February. The last IGC meeting was held in New Delhi in June.

“The meeting will provide us a platform to discuss various issues in detail, which will help in removing potential trade barriers,” said Sainju.

The Indian government allowed Nepal to use Visakhapatnam Port for third-country trade during former Prime Minister KP Sharma Oli’s visit to New Delhi in February. However, the new trade corridor failed to come into operation earlier, as banks were barred from issuing letters of credit for goods entering the country via the port located in the east coast of India.

With the permission granted by Nepal Rastra Bank, the central bank, to commercial banks to issue letters of credit for goods coming into the country from the port earlier this week, trade volume via the new trade corridor is expected to go up in the coming days. 

Letters of credit are required for valuation of cargos at customs points, as they contain information on cost of goods, insurance and freight (CIF) based on which customs and other duties are fixed.

Currently, Nepal is totally reliant on the port in Haldia, Kolkata, to bring in goods from or send goods to third countries. Because of this, Nepal had long demanded access to another port.

However, the drawback in the use of Visakhapatnam Port is the distance from Nepal, which stands at around 1,436 km. The port in Kolkata, on the other hand, is situated around 704 km from the country. 

Losses that traders are likely to incur because of this factor, however, are expected to be negated by the presence of deepwater port Visakhapatnam, which can handle bigger cargo vessels, reducing ocean freight cost. 

The port in Haldia, on the other hand, is relatively shallower, so cargoes need to be reloaded into smaller vessels in Singapore before they arrive in Kolkata.

“Although opening of Visakhapatnam Port will facilitate Nepal’s third-country trade, traders won’t be able to reap maximum benefit until the government opens an office to process trade-related documents and address other issues that crop up on day-to-day basis,” said Rajan Sharma, immediate past president of Nepal Freight Forwarders Association.

The government has said Nepali Embassy in New Delhi will look into these issues till the time a consulate is opened in Visakhapatnam. “We are now thinking of deputing a staff from our embassy in New Delhi to facilitate freight forwarders,” said Sainju.

If such arrangements are not made on time, Sharma warned, freight forwarders will have to appoint two different persons in New Delhi and Visakhapatnam to process various works, which will raise cost of conducting trade.