Nepal has failed to ensure a notable improvement in trade related logistics even with a stable government and is hindering the country’s trade potential, according to trade analysts during the India-Nepal Logistics Summit on Sunday.

Speaking at the summit, analysts also pointed out that Nepal’s trade potential is being stifled mainly by the poor physical infrastructure and administrative set up. “As a result, Nepal has failed to maximise benefits from the preferential treatment offered by a number of its trading partners,” said Pradeep Kumar Shrestha, managing director of Panchakanya Group.

According to the World Bank’s latest global Logistics Performance Index (LPI) Report 2018, Nepal ranked 114th out of 167 countries when it comes to the logistics management related to trade. Nepal has made significant progress in customs procedures, trade logistics quality, tracking system and timeliness of delivery, says the report.

Despite the progress, Nepali traders are still facing a number of hurdles while transporting goods through Indian land. Increasing traffic at Kolkata Port, unavailability of adequate number of railway rakes, congestion at Birgunj Inland Container Depot, lack of full-fledged operation of Birgunj Integrated Check Post and excessive documentation process, among others, are some of the problems hindering Nepal’s trade potential.

In the trade policy review submitted to the World Trade Organisation last December, the intergovernmental organisation criticised Nepal mainly for slow progress in formulating and implementing legal frameworks for different types of trade policies and intellectual property rights to boost its production and trading capacity in the global market.

Madhu Marasini, joint-secretary of the Ministry of Industry, Commerce and Supplies, said the government has now given priority to a number of measures such as enhancing connectivity including inland waterways, revising trading policy and revising the trade treaty with India to improve the country’s trade position with the southern neighbour.

Currently, about two-thirds of the country’s trade is with India. Nepal is facing a huge deficit when it comes to trading with both southern neighbour and third countries. According to the Department of Customs, the country’s trade deficit stood at Rs1.32 trillion in the last fiscal year, up by 13.55 percent. Nepal’s trade deficit with India alone was Rs855.19 billion.

Nepal’s exportable goods are often put under the spotlight for lacking in quality and being costly. “Unless exportable items become competitive in the global market, the country cannot minimise the enlarging trade deficit,” said Ananda Swarup, joint secretary of the Ministry of Commerce and Industry, India.

Swarup said the Indian government recently enforced a separate logistics policy as an integrated measure to address the issues related to transportation, scaling and packaging, faster inter-state movement of goods and trade corridors. “As Nepali traders can also use these logistics as per the bilateral trade treaty, Nepal can benefit from these facilities mainly while trading with third countries,” he said.

Rameshwor Dangal, director general of the Department of Customs, said the government is now focused on building integrated check posts, inland container depots and yard management office at the main customs points. “In addition, the department has prioritised implementing a paperless system and capacity building of officials at the customs offices in order to check the administrative hassles there,” said Dangal.

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