The Government of Nepal, which imposed a ban on the import of nine types of dairy products 11 months ago, has hinted at lifting the restrictions on at least two items following intense lobbying by India. The two countries reportedly reached an understanding on this issue during the Nepal-India Commerce Secretary-level Intergovernmental Committee Meeting held on Friday and Saturday, with discussions focused on Nepal opening imports of specific dairy products to support its industries.

According to a statement issued by India’s Ministry of Commerce and Industry on Sunday, Nepal has responded positively to the import of cheese and whey (milk/yogurt), which are not produced domestically. However, Nepal's Ministry of Industry, Commerce, and Supplies did not explicitly mention this issue in its press release.

Spokesperson for the Ministry of Industry, Baburam Adhikari, clarified that while India requested the complete removal of the ban, Nepal has agreed to consider allowing imports of products that are not sufficiently produced within the country, such as mozzarella cheese used in pizza production.

“Nepali industries have demanded certain dairy products that are not produced locally. For such items, we have indicated a positive stance,” Adhikari explained. He added that India also requested the import of honey, but Nepal declined, citing the lack of market access for domestically produced honey.

Indian-invested Dabur Nepal has been urging the government to permit honey imports, arguing that maintaining the required quality standards is challenging with Nepali honey. The company had even submitted a formal request to the government in this regard.

The import ban, implemented on February 15, 2024, has reportedly caused difficulties for businesses in preparing various dairy-based dishes, especially those preferred by foreign tourists. Star hotels, which use high-quality butter, mozzarella, and French cheeses, have voiced concerns about the lack of quality cheese affecting their ability to meet international culinary standards.

The Nepal-India Chamber of Commerce and Industry (NICCI) welcomed the discussions, stating that they would enhance bilateral trade and investment. The trade meeting also reviewed transit and trade treaties, aiming to harmonize standards and improve infrastructure, including electrifying the Raxaul-Birgunj rail line. NICCI emphasized that these developments would inject new momentum into trade and transit between the two countries.

In a separate statement, the Ministry of Industry, Commerce, and Supplies announced agreements on several trade facilitation measures. The load limits imposed on Nepali freight vehicles traveling via the Kakadbhitta-Phulbari-Banglabandha route will be lifted, allowing them to operate under the same conditions as Indian freight vehicles. Currently, vehicles are restricted to carrying 18.5 tons or 28 tons, depending on their size.

Additionally, Nepal will now use the ports of Odisha (Dhamra) and Mundra (Gujarat) for third-country trade, alongside the Kolkata port for importing and exporting goods. Both countries have agreed to expedite the necessary letters of exchange for these arrangements.

NICCI also welcomed the decision to construct a new integrated check post on the Nepal-India border and the export of 200,000 metric tons of wheat to Nepal at the latter's request. Nepal has proposed expanding the rail network to the Nepalgunj Integrated Check Post, the Kakadbhitta Inland Container Depot (ICD), and the under-construction Dodhara-Chandani Integrated Check Post. In response, the Indian side committed to conducting the necessary surveys to explore the feasibility of these expansions and improve connectivity between the two nations.