The five-line news item on the closure of the Nepal office of the Confederation of Indian Industries (CII) was over-shadowed last week by the thrilling news coming out of the Public Accounts Committee debates. However, let us not underestimate the significance of the CII pullout. The doors for investment in this country are shutting, and if there was any final proof needed it was this. The timing of this announcement was also significant, coming as it did a week before a trade fair organised by the India Trade Promotion Organisation (ITPO). If it was a signal from Indian business to Nepali busi-nesses, it was heard loud and clear. The CII is an organised forum of the captains of Indian industry and has been instrumental in bringing about economic cooperation between the two countries. It was the Joint Task Force of the CII and the Federation of Nepalese Chamber of Commerce and Industry (FNCCI) that worked to formulate prescriptive suggestions for both the governments, many of which have found their way in the historic trade and transit treaty of 1997. It is in this context that the CII decision to pull out of Nepal leaves many questions unanswered: some relating to the Nepali government's own policies, others concerning the bureaucracy, and even the Nepali private sector. CII activities in India started picking up after the wave of reforms in the early 1990s.

It was felt that the Federation of Chamber of Commerce of India (FICCI) was not the right vehicle to take on issues with the government relating to larger industries and business houses. CII has been actively supporting the Indian government on issues ranging from fiscal policy to international trade. As Indian economic liberalisation gathered pace in the 1990s, it constantly expanded its activities by opening offices in different countries with significant business interest to India. Nepal's relations with India has never been pure business, it has always been adulterated by politics. Despite its assurances to Prime Minister Koirala last month to remove countervailing duties on exports India has yet to do so. For its part, Nepal has not yet acted on Indian pleas to curb illicit border trade. That is why CII's presence here was so crucial. It wasn't just symbolic: there were actual benefits in having the lobbying power to foster legitimate trade. Smuggling only benefits smugglers, free trade benefits everyone. Now the initial euphoria brought about by the formation of the Nepal India Chamber of Commerce (NICCI) and the 1997 signing of the Trade and Transit treaty, after which the CII set up shop in Nepal, have all but evaporated. Closure of the CII outpost here is going to hurt the credibility of Nepal's investment climate, the sanctity of various business-related fora in Nepal, and we are going to lose its mediating and lobbying role. It also time for hard questions: did CII really think that Nepal was not worthwhile, or did it just have problems with its Nepali counterpart? Why is the FNCCI mum? Ditto for NICCI. Are our government and bureaucracy fully aware of the implications of saying bye-bye to CII? Readers can post their views and discuss issues at arthabeed@yahoo.com