The first week of April brought much-needed relief to Nepali exporters as India addressed two major trade barriers, despite ongoing diplomatic tensions. In a significant boost to cross-border trade, India recognized Nepali food testing certifications and renewed Bureau of Indian Standards (BIS) approval for manufacturers, clearing regulatory bottlenecks and paving the way for increased exports to Nepal’s largest trading partner.

The delay in BIS renewals had severely impacted Nepali cement, plywood and steel industries. In FY 2023/24, Nepal’s cement sector celebrated a milestone, exporting Rs 3.85 billion worth of cement to India. Encouraged by this success, three major producers ramped up production, anticipating sustained demand in the southern neighbor. However, their momentum stalled when India failed to renew the mandatory BIS certifications, disrupting exports. More than 100 other manufacturers across different sectors faced similar setbacks. At the same time, food exporters struggled with another hurdle. Although Nepal and India had signed a Memorandum of Understanding to recognize 10 food categories, Indian authorities continued rejecting test results from Nepali labs, forcing exporters to send samples to India for re-testing, leading to delays and added costs.

The Indian government’s recent decisions have now resolved these long-standing issues. First, BIS certification renewals for 129 Nepali manufacturers have eased exports of cement, plywood and steel, among other products. Second, India has agreed to accept test results from Nepal’s National Food and Feed Reference Laboratory, under the Department of Food Technology and Quality Control (DFTQC), for nine food categories.

Following an inspection in early May by officials from India’s Food Safety and Standards Authority (FSSAI), the Embassy of India in Kathmandu formally recognized the DFTQC lab’s results for 10 food categories, including fats and oils, fruits and vegetables, cereals (such as rice, wheat, corn and millet), tea and coffee, milk and dairy products, honey and sweeteners, meat products, spices, processed drinking water, and dietary supplements.

Manufacturers Rejoice

A total of 129 Nepali manufacturers have now renewed their BIS certifications, allowing stalled shipments to resume. The certification, mandatory since September 2023, enables these businesses to regain and expand their access in the Indian market.

In the cement sector, major players like Sarbottam Cement (Nawalparasi) and Samrat Cement (Dang) have renewed their certification for export of ordinary Portland cement (OPC). The certification is valid until January 2026. Sarbottam has also received approval, which is valid through July, for the export of Portland pozzolana cement (PPC). Arghakhanchi Cement and Nepal Shalimar Cement (Birgunj) have renewed certifications for PPC cement, valid until September and August 2025, respectively. However, Shivam Cement has yet to renew its license, which expired in February 2024.

Rajesh Kumar Agrawal, chairperson of the Industry Committee at the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), noted that delays in BIS renewals had forced many manufacturers to cut production, threatening their competitiveness in the Indian market. “We are excited to restart exports to India, as Nepali cement has strong potential in states like Bihar and Uttar Pradesh,” he said.

With sluggish domestic demand, exports have become crucial for cement producers. However, Agrawal pointed out that despite completing paperwork and paying necessary fees, slow inspections by Indian authorities continue to delay certifications, particularly for construction materials. “India consumes around 500 million tons of cement annually. Capturing even one percent of that demand would sustain Nepali producers,” he added, cautioning that renewal challenges still limit market access.

In the metals sector, Rajesh Metal Crafts (Bara) has been certified for galvanized and carbon steel sheets exports until February 2026, while Aarati Strips in Morang has certification for carbon steel sheets and strips valid January 2026. Siddhi Laxmi Steels and Goyal Ispat, both based in Nawalparasi, have received approval to export steel bars and wires, and hollow steel sections, respectively, with certificates valid until February 2026. Meanwhile, Ambe Steels and Jagdamba Steel are still awaiting renewals for mild steel wire exports.

The plywood sector also saw positive developments, with certifications granted to Shyam Plywood (Rupandehi), Bhusal Ply and Bamboo Industries (Nawalparasi), Everest Veneers (Sunsari) and Sawariya Plywood in Jhapa. Each has received clearance for the export of general-purpose plywood until March 2026.

In other manufacturing segments, Hulas Iron Industries (Parsa) and Arihant Multi-Fibres (Sunsari) have received certification for the export of galvanised steel wire and twill jute bags, respectively, till June 2026. Likewise, BHP Manufacturing (Bara) can now export pressure cookers without any hurdles until January 2026.

Likewise, approvals have been obtained for Health and Hygiene Products (Morang) for sanitary napkins, Jay Shree Polymers (Sunsari) for sandals and slippers, and Pulse Fashion Solutions (Sunsari) for sports footwear. Swastik Oil Industries (Morang) has received approval to export acid oil, while Manglam Industries (Rupandehi), Hilltake Plastic and Pipe Industries (Kathmandu) and Asian Concreto (Nawalparasi) now have necessary certifications to export unplasticized PVC, wall piping and concrete paving blocks, respectively.

Recognition After Five Years

Five years after the signing of Memorandum of Understanding, India has formally recognized food testing certificates issued by Nepal’s NFFRL—a move that simplifies the export process for a range of agricultural and processed food products.

The Kathmandu-based lab, operating under DFTQC, received accreditation from India’s Food Safety and Standards Authority (FSSAI). The development means test reports for eight food items—juice, jam, jelly, pickles, candies, ginger, fresh fruits and vegetables, and instant noodles—can now be submitted directly at Indian customs without additional testing requirements.

This breakthrough ends the lengthy regulatory process that began in 2019 when Nepal mandated pesticide testing on Indian produce entering its markets, citing public health concerns. However, a lack of adequate testing infrastructure triggered border delays and diplomatic tensions, prompting Nepal to reverse the decision under Indian pressure. Public outrage and legal interventions kept the debate alive. While technical requirements have now been met, formal documentation from Indian authorities is still pending. “We will receive it soon,” said Mohan Krishna Shrestha, spokesperson for the DFTQC.

The framework for mutual recognition, which was first agreed upon in August 2019, covered 10 broad food categories. However, implementation was stalled due to standard harmonization challenges, the need to expand testing parameters and disruptions caused by the Covid-19 pandemic. India later required Nepal to undergo an integrated assessment before granting lab accreditation.

“India initially gave us one year to ensure compliance,” Shrestha said, adding that while official confirmation is still awaited, informal communication suggests that the recognition has been granted.

It, however, remains unclear whether the certification applies strictly to the eight approved items or if it extends to the broader 10 categories originally proposed—such as dairy, oils, cereals, meat, fish, confectionery, sweeteners, beverages and spices.

According to Sanjiv Kumar Karna, Director General of the DFTQC, the Indian embassy in Kathmandu has received a letter from the FSSAI, confirming mutual recognition of the NFFRL’s testing capabilities. The move is expected to reduce export costs, streamline logistics and enhance the competitiveness of Nepali food products in the Indian market. Until now, exporters had to send samples to Indian labs—typically in Lucknow or Kolkata—paying a fee of Rs 25,000 to Rs 35,000 per test. In addition, many had to rely on intermediaries, incurring transport and unofficial fees that reportedly added Rs 50,000 to Rs 60,000 per truck.

“With this recognition, it will be much easier for Nepali exporters to send food products to India,” Karna said. “The cost and hassle of cross-border testing will be significantly reduced.”

In the previous fiscal year, Nepal exported 10,069 tons of ginger worth Rs 1 billion and 50,765 tons of juice valued at Rs 4.88 billion to India. Other notable exports included 1 ton of jam and jelly (Rs 1.56 million), 182 ton of pickles (Rs 150.81 million), 40 ton of sugar confectionery (Rs 11.17 million), 559 tons of fresh fruits (Rs 19.02 million), and 11,735 tons of vegetables (Rs 201.87 million).

Major export routes included the Mechi and Bhairahawa customs points.

Adding More Products

Following India’s recognition of the NFFRL, Nepali authorities are preparing to expand the list of accredited food items eligible for export. While the current approval covers eight specific products, efforts are underway to secure recognition for a broader range of goods.

Nepal had initially sought approval for 10 major food categories: milk and dairy products, fats and oils, fruits and vegetables, cereals and cereal products, meat and meat products, fish and fish products, sweets and confectionery, sweeteners including honey, beverages, and salt, spices and condiments. Although not all were approved in the first phase, discussions are ongoing to expand the scope of accreditation.

Among the additional products Nepal plans to include in future assessments are tea, edible oils, biscuits and cookies—items seen as having strong export potential in India’s vast consumer market. The DFTQC has already started aligning its testing protocols and documentation with the standards required for further recognition.

“We are working to add more products to the approved list,” confirmed DFTQC Spokesperson Shrestha. 

To support this effort, the NFFRL is upgrading its facilities and procedures to meet international testing standards. These enhancements aim to fulfill any remaining technical requirements set by India’s FSSAI, which are essential for broadening the list of certified products.

Once additional food items are approved, the move is expected to ease regulatory burdens, boost the volume and value of Nepali exports, and help diversify the country’s export portfolio.

“The expansion will benefit local farmers, food processors, and small and medium enterprises by providing them easier access to Indian markets—without the need for costly and time-consuming testing in Indian laboratories,” Shrestha added.

Challenges Remain

Despite recent progress in certification renewals, many Nepali manufacturers continue to face persistent delays in the BIS approval process. While renewals should take about a month and new certifications five to six months, companies often wait far longer—sometimes even years. These delays severely impact operations, forcing producers to scale back or halt production due to uncertainty around export clearance.

Industry leaders warn that these issues are likely to resurface in the absence of lasting diplomatic solutions. “The problems may seem resolved now, but we’ll face the same hurdles again next year during the renewal cycle,” one manufacturer said.

The bottlenecks have been especially detrimental to sectors like cement and steel, where export markets are essential amid slowing domestic demand. Exporters point to sluggish inspections and approvals from the Indian side—even after all documents and fees are submitted—as a major obstacle.

Adding to the challenge is the limited one-year validity of BIS certifications. With long approval delays, the effective time left for exporters to operate under valid certificates is drastically reduced. For instance, Shivam Cement has been unable to resume exports for over a year due to expiry of its BIS certification.

According to FNCCI’s Agrawal, some recent BIS renewals have come with backdated validity. “Companies that applied six months ago are now receiving certificates valid only from the original expiry date. This means they are left with just a few months or even days before needing renewal again,” he explained.

In some cases, approvals were issued 360 days after application, leaving only five days of valid certification.

Agrawal urged the government to pursue a diplomatic resolution with India, advocating for BIS certifications with a longer validity—ideally three to four years. “This would offer businesses greater stability and predictability, allowing them to operate and export without constant disruption,” he added.

Steel producers like Ambe Steels and Jagdamba Steel remain in limbo awaiting renewals, jeopardizing their access to the Indian market. If unaddressed, such bureaucratic inefficiencies could erode the positive momentum generated by recent progress and threaten Nepal’s efforts to expand its export base.

A similar concern has been raised in the coffee sector. Omnath Adhikari of the Nepal Coffee Federation welcomed India’s recent recognition of Nepali coffee for export, calling it a “positive development.” Nepal currently exports around 100 tons of coffee to India annually. However, he noted that despite the recognition, several hurdles remain. “The most pressing issue is the lack of proper testing and certification infrastructure for coffee in India,” Adhikari said. “Though India accepts that Nepali coffee is safe to consume, it lacks the laboratory capacity to analyze and certify its specific content or quality.”

Because of this, Nepali coffee is accepted largely on trust and basic safety assurances, without detailed quality certification or content labeling. This has limited competitiveness and market transparency of Nepali coffee.

Coffee exporters say the solution is straightforward. “If the government allowed or encouraged the private sector to establish dedicated coffee testing laboratories, we could conduct the necessary analysis in Nepal itself. The government could then issue certifications based on those results,” they explained.

Establishing such a lab in Nepal would cost no more than Rs 15 million, a relatively modest investment. However, in the absence of government support or initiative, this practical and cost-effective solution remains unimplemented. This has held back the potential of Nepali coffee exports to India.

(This news report was originally published in  May 2025  issue of New Business Age Magazine.)