SYLLABUS
GS-2: India and its neighbourhood- relations.
Context: Recently, India and Nepal signed a Letter of Exchange (LoE) to amend the Protocol to the Treaty of Transit to expand rail-based trade routes and strengthen multimodal connectivity.
More on the News
- The LoE expands rail-based freight movement between Jogbani (India) and Biratnagar (Nepal), which was constructed with Indian grant assistance and jointly inaugurated by the Prime Ministers of the two countries in June 2023.
- The LoE liberalises freight movement along major transit corridors such as Kolkata–Jogbani, Kolkata–Nautanwa (Sunauli), and Visakhapatnam–Nautanwa (Sunauli).
- Both sides also reviewed ongoing connectivity projects, including Integrated Check Posts and logistics-related infrastructure.
Treaty of Transit between India and Nepal
- The first treaty of transit between India and Nepal was signed in 1960. The treaty was originally a combined “Treaty of Trade and Transit” and was periodically renewed to provide Nepal with transit access for its trade. A separate “Treaty of Transit” was signed in 1978.
- Under the treaty, the Contracting Parties shall accord to “traffic-in-transit” freedom of transit across their respective territories through routes mutually agreed upon.
- No distinction shall be made which is based on the flag of Rap vessels, the places of origin, departure, entry, exit, destination, ownership of goods or vessels.
- The term “traffic-in-transit” means the passage of goods, including unaccompanied baggage, across the territory of a Contracting party when the passage is a portion of a complete journey which begins or terminates within the territory of the other Contracting Party.
Significance of the LoE
- The agreement expands Nepal’s rail-based transit options, reducing dependence on Birgunj ICP and easing congestion.
- E.g: Cargo that previously had to pass only through Birgunj can now be routed through Biratnagar and Nautanwa, reducing delays.
- The expanded rail connectivity lowers logistics costs and transportation time for Nepal’s third-country trade.
- E.g: Goods imported from Kolkata or Visakhapatnam ports can now reach Eastern Nepal faster and at lower cost through the Jogbani–Biratnagar rail link.
- The amendment boosts Nepal’s industrial and trading capacity by allowing all types of goods—containerised and bulk—to be transported by rail.
- E.g: Expansion of the Jogbani–Biratnagar rail line will enable direct containerized and bulk cargo movement from Indian ports to Nepal’s customs yard in Morang District.
- The amendment facilitates direct rail transport of goods between Kolkata and Visakhapatnam ports and Nepal’s Biratnagar customs station.
- The move enhances regional connectivity and strengthens India–Nepal economic integration. The liberalisation of corridors such as Kolkata–Jogbani and Kolkata–Nautanwa supports smoother bilateral trade and improves Nepal’s access to global markets.
