India's delay in issuing and renewing quality certificates for various industrial goods has impacted Nepal’s export.

The country’s cement industry is among the hardest hit after the Southern neighbour started strict implementation of its policy recently. 

Both the Government of Nepal and industrialists have said that the requirement for quality certification has posed challenges for the export of products such as cement, plywood, footwear, zinc sheets, and sanitary pads among others. 

Recent statistics from the Department of Customs show that cement exports have declined in the first quarter of the current fiscal year.

Nepal exported 18,308 tonnes of cement worth Rs 101.95 million between mid-July and mid-October this fiscal year, compared to 155,248 tonnes worth Rs 468.99 million in the same period last fiscal year.

Though the data show an increase in exports of plywood and footwear in the period, industrialists claimed that the consequences of India's recent move will be visible in the coming days. “The size of export would have been significantly larger if India had not imposed these requirements,” they said. 

Notably, Goldstar shoes, a well-known Nepali brand, was thriving in the Indian markets of Uttar Pradesh and Bihar, but exports have come to a halt in recent months.

To export products to India, Nepali industries are required to obtain the Bureau of Indian Standards (BIS) certificate, which is valid for two years and must be renewed thereafter. 

Government sources have claimed that the delay in renewing these certificates is an indirect pressure tactic of India, aimed at compelling Nepal to lift its ban on import of dairy products.

There have been reports that Nepal may yield to this pressure soon.

Pashupati Murarka, Co-owner of Arghakhanchi Cement Industry, claimed that his industry has not been given the renewal certificate despite initiating the process to get it two months before the BIS certificate expired on September 25.

Cement exports to India have come to a halt since then in the absence of the renewal certificate, Murarka told NBA.

“Although we have met all the requirements, the certificate is yet to be renewed," Murarka said. “The government should take necessary steps to address this issue.”

The hindrance to Nepali export also involves a geopolitical reason. 

Despite having a 'cold' relationship, Nepal’s Southern and Northern neighbours have ‘warm’ trade ties.

(Chinese President Xi Jinping meets with Indian Prime Minister Narendra Modi on the sidelines of the 16th BRICS Summit in Kazan, Russia, October 23, 2024. Photo: Xinhua/RSS )

According to the Embassy of India in Beijing , the bilateral trade between the two countries from 2016 to 2023 grew by 66.38 percent, an average yearly growth of 9.48 percent. “In 2023, the overall trade with China decreased by 1.66 percent year-on-year to reach USD 115.82 billion, crossing the USD 100 billion mark for a third time in a row.”

Similarly, the Indian daily The Economic Times, citing the commerce ministry data, recently reported that “China has emerged as India's top import source with USD 56.29 billion worth of inbound shipments during the April-September period of this fiscal”.

Likewise the South China Morning Post, the Hong Kong-based english daily, reported earlier this year in May that data from the Global Trade Research Initiative economic think tank showed China was India’s largest trading partner in the 2023-24 financial year, with two-way import and export volumes slightly exceeding the South Asian country’s trade with the United States.

However, India has been barring, unofficially, the export of Nepali products from cement to hydroelectricity produced with Chinese investment. 

Additionally, India has also denied Nepal with the explosive materials needed for infrastructure projects involving Chinese contractors of investment. 

Earlier, industrialists in Bara-Parsa Industrial Corridor had also accused Indian of delaying decisions, under various pretext, on files submitted for quality certification of cement produced by using clinker made by companies with Chinese investment. 

An official from the Consulate General of India, Birgunj had told the NBA last month that their policy was to facilitate cement exports form companies with Nepali investment. 

Meanwhile, some companies which have set up a laboratory for testing their products have reported timely exports to India. The company that manufactures slippers under the Magic brand in Biratnagar is among such companies. It has been operating a quality testing lab set up with an investment of Rs 10 million.

Mahesh Baheti, the country head of Magic Slippers, previously informed NBA that his company had not faced any issues, as it set up the lab within the grace period and began sending goods to the Indian market after conducting quality tests. 

Century Ply and Green Ply in Biratnagar are producing and exporting products by installing quality testing technology in accordance with Indian standards.

According to the Ministry of Industry, Commerce, and Supplies, it has received complaints from business owners regarding the lack of renewed BIS certificates and the issuance of new ones for various materials. 

A senior official indicated that they are prepared to engage in formal discussions with India on this issue. “Discussions will be conducted through diplomatic means, but it may take some time,” he said in conditions of anonymity.

Amid the issue, Nepal’s export to India fell by 6.11 percent in the first quarter of the fiscal year compared to the same period last year, decreasing from Rs 40.87 billion to Rs 38.38 billion.