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What is the story about?
India and Nepal are looking to strengthen customs and trade cooperation while addressing the misuse of preferential market access between the two countries.
The discussions took place during the India-Nepal Inter-Governmental Sub-Committee (IGSC) on Trade, Transit and Cooperation to Control Unauthorised Trade, held in New Delhi on September 16 and 17.
The two sides reviewed a range of trade-related issues, including market access, customs and trade facilitation, standards, food safety, phytosanitary measures, pharmaceuticals, medical devices, AYUSH products, border infrastructure, and rail and road connectivity.
The IGSC is a bilateral institutional mechanism for the detailed examination of trade and trade-related issues and for facilitating bilateral trade and transit.
India-Nepal bilateral trade
Bilateral trade between India and Nepal stood at $9.34 billion in FY 2025-26. India's exports to Nepal were valued at $7.4 billion, while Nepal's exports to India stood at $1.94 billion.
During the meeting, both sides discussed measures to facilitate greater market access for products from India and Nepal. The discussions covered agricultural products, dairy, food products, pharmaceuticals, medical devices and AYUSH products, along with standards and phytosanitary requirements.
The two sides also discussed strengthening customs cooperation and trade facilitation through measures such as pre-arrival exchange of information, electronic verification of Certificates of Origin, and customs automation and digitalisation.
The discussions focused on facilitating legitimate trade while strengthening mechanisms to ensure compliance with applicable rules and prevent the misuse of preferential trade arrangements.
Connectivity, infrastructure in focus
Both sides reviewed rail and road connectivity, movement of freight, Integrated Check Posts and land-port infrastructure.
The discussions also focused on improving the utilisation of existing infrastructure and addressing operational bottlenecks affecting bilateral and transit trade.
Welcoming continued cooperation in standards, food safety, plant quarantine and conformity assessment, including institutional cooperation and capacity-building initiatives, both sides emphasised continued cooperation between relevant agencies.
The aim is to facilitate legitimate cross-border trade and address issues relating to unauthorised trade and commercial fraud.
India's role in Nepal's trade
India is Nepal's largest trade partner and the largest source of foreign investment, besides providing transit to Nepal for trade with other countries.
Trade with India accounts for about two-thirds of Nepal's overall external merchandise trade. In services, trade with India constitutes about one-third of Nepal's overall trade in services.
India is also the source of one-third of Nepal's foreign direct investments, almost 100% of its petroleum supplies, and a significant share of inward remittances on account of pensioners, professionals and workers employed in India.
India-Nepal trade framework
The bilateral framework for trade is governed by the India-Nepal Treaty of Trade and the Agreement of Co-operation to Control Unauthorised Trade-2009. The agreement was automatically renewed in October 2023 and allows Nepal unilateral duty-free access to the Indian market.
India and Nepal also have a Treaty of Transit, which provides transit rights through each other's territory through mutually agreed routes and modalities.
The revised Treaty of Transit was signed on June 1, 2023, for a period of seven years.
The discussions took place during the India-Nepal Inter-Governmental Sub-Committee (IGSC) on Trade, Transit and Cooperation to Control Unauthorised Trade, held in New Delhi on September 16 and 17.
The two sides reviewed a range of trade-related issues, including market access, customs and trade facilitation, standards, food safety, phytosanitary measures, pharmaceuticals, medical devices, AYUSH products, border infrastructure, and rail and road connectivity.
The IGSC is a bilateral institutional mechanism for the detailed examination of trade and trade-related issues and for facilitating bilateral trade and transit.
India-Nepal bilateral trade
Bilateral trade between India and Nepal stood at $9.34 billion in FY 2025-26. India's exports to Nepal were valued at $7.4 billion, while Nepal's exports to India stood at $1.94 billion.
During the meeting, both sides discussed measures to facilitate greater market access for products from India and Nepal. The discussions covered agricultural products, dairy, food products, pharmaceuticals, medical devices and AYUSH products, along with standards and phytosanitary requirements.
The two sides also discussed strengthening customs cooperation and trade facilitation through measures such as pre-arrival exchange of information, electronic verification of Certificates of Origin, and customs automation and digitalisation.
The discussions focused on facilitating legitimate trade while strengthening mechanisms to ensure compliance with applicable rules and prevent the misuse of preferential trade arrangements.
Connectivity, infrastructure in focus
Both sides reviewed rail and road connectivity, movement of freight, Integrated Check Posts and land-port infrastructure.
The discussions also focused on improving the utilisation of existing infrastructure and addressing operational bottlenecks affecting bilateral and transit trade.
Welcoming continued cooperation in standards, food safety, plant quarantine and conformity assessment, including institutional cooperation and capacity-building initiatives, both sides emphasised continued cooperation between relevant agencies.
The aim is to facilitate legitimate cross-border trade and address issues relating to unauthorised trade and commercial fraud.
India's role in Nepal's trade
India is Nepal's largest trade partner and the largest source of foreign investment, besides providing transit to Nepal for trade with other countries.
Trade with India accounts for about two-thirds of Nepal's overall external merchandise trade. In services, trade with India constitutes about one-third of Nepal's overall trade in services.
India is also the source of one-third of Nepal's foreign direct investments, almost 100% of its petroleum supplies, and a significant share of inward remittances on account of pensioners, professionals and workers employed in India.
India-Nepal trade framework
The bilateral framework for trade is governed by the India-Nepal Treaty of Trade and the Agreement of Co-operation to Control Unauthorised Trade-2009. The agreement was automatically renewed in October 2023 and allows Nepal unilateral duty-free access to the Indian market.
India and Nepal also have a Treaty of Transit, which provides transit rights through each other's territory through mutually agreed routes and modalities.
The revised Treaty of Transit was signed on June 1, 2023, for a period of seven years.
