Nepali Times
Economic Sense
Bullying Nepal


After the 'Nepal Game Plan' it is the 'Himalayan Blunder', a thriller published in The Economic Times-the Indian media never misses a chance to bully Nepal. It is rare to find positive coverage about Nepal in any form of Indian media. A small show of concern about imports from Nepal by an Indian business group has been blown up out of proportion. Of course, they will never fail to find the nexus between Chinese toys, the ISI and Nepal. Like their counterparts in Nepal, smaller Indian businesses, mostly traders, want protection measures in place for domestic industries. They are scared of the advent of the WTO, because Indian products are known to fall short of global quality benchmarks. Small-scale Indian industries have grown because of the presence of subsidies rather than by increasing productivity or their scale of production. They know it is difficult to be more competitive than China, where efficiency and mass-market production have been promoted heavily in the last decade. India has never been able to confront or criticize China head-on, whether through the media or the government, and anti-China sentiments are vented on Nepal. China has understood the potential of the market of a billion people west of their border, while India never saw China as a potential market of a billion people to the east.

Nepali exports to India have definitely increased over the last five years, however imports of US$200 million from Nepal is a miniscule fraction of India's total imports. So why is there such a hue and cry? Are they aiming at non-issues just because they cannot find anything seriously negative to say about Nepal? It seems as if some people simply can't digest the fact that the international-quality toothpaste they brush their teeth with is Made in Nepal.

The Indian government is certainly cognizant of the informal trade between the two countries. Everyone knows that tons of the gold that enters Nepal finally finds its way into India. In the early nineties, when the Nepali population was only around 18 million, Nepal officially imported 50 million umbrellas each year and Rs 41 million worth of flashlights. These goods originated mostly from China and found their way in here through the porous border.

The preferential trade treaty was signed between India and Nepal for mutual benefit. It was thought that the populous border states of North India would be served more cheaply through manufacturing units based in Nepal rather than, say, in South India. This encouraged Indian manufacturing giants like Hindustan Lever and Dabur to set shop in Nepal. Trading communities on both sides of the border quickly found loopholes in the treaty and have exploited them for ages. If the regulators in both countries are weak, the informal economy should not be blamed. Nepal, despite its normally ham-handled implementation of anything, has initiated regulation of trade with China by making the use of banking channels mandatory. The proportion of goods re-exported from Nepal to India is statistically an insignificant figure, as the bulk of exports are agro-based, and the remainder are from Indian-owned production units in Nepal.

The underlying issue is that yes, India is flooded with cheap goods from China, but these don't come only from Nepal. They come from Dubai, Singapore, Thailand and even Burma. Chinese companies are setting up factories in India and these are definitely providing white goods such as electronics at a cheaper rate.

India needs to seriously think about this sporadic Nepal-bashing by the media. If the Chinese goods that are available in Indian markets are cheaper and better than the spurious junk that is produced in the backyards of Chandni Chowk, it is not Nepal's fault. Indian business and industry are to blame.

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(11 JAN 2013 - 17 JAN 2013)