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More Agreements Between India And Nepal

November 27, 2014

On the sidelines of the 18th SAARC Summit 2014, India and Nepal signed ten bilateral agreements. Some of these agreements have the potential to boost bilateral investment, trade and tourism. The four major bilateral agreements signed between the two countries - India and Nepal include the following:

 

· The Project Development Agreement (PDA) for the 900 MW Arun III plant with the state owned Sutlej Jal Vidyut Nigam Limited on the lines of the PDA signed with GMR on the Upper Karnali Hydropower Project.

 

· There has been more clarity on what the USD 1 billion Line of Credit from India to Nepal through the Indian Exim Bank can be used for. The credit line will be utilized in funding major infrastructure and energy projects.

 

· Other agreements focus on tourism, easing road transportation between the two countries through the Motor Vehicle Agreement, and building a strong religious tourist circuit comprising of important Hindu and Buddhist destinations in both countries as per the Twin City Agreement between Ayodhya and Janakpur; Kathmandu and Varanasi; and Lumbini and Bodh Gaya. This would help to cross sell destinations between the two countries.

 

· Agreements have also been signed on Traditional Medicines, Nepal Police Academy, and Youth Exchange.

 

Given the nature of Indian Prime Minister Narendra Modi's impetus on neighborhood, there will be more bilateral initiatives announced in the future. However, given the dismal past records of actually implementing things on ground, we will have to wait and watch over the next couple of months.

 

Considering that PM Modi has not undertaken the religious pilgrimage planned during the 18th SAARC Summit, it is expected that he will visit Nepal soon, which will put pressure on the implementation of the signed agreements.