Wednesday, March 24, 2010

(2) Evolution of Trade in Nepal

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Trade plays an important role in the economic development of country. In the early stage of economic development, Nepal's trade was limited with India and Tibet alone. During that period the major exports from Nepal comprised rice, timber, herbs and medical plants, and handicrafts, and the major import items were cloth, salt, medicines and kerosene oil.

The year 1923 was a momentous year for the country. A Treaty of Peace and Friendship' was concluded between the government of Nepal and the Government of Great Britain. As per the treaty, Nepal could carry on import trade free of duty via India. Thus, this treaty was a landmark for Nepal to diversity its foreign trade.

India and Tibet, autonomous region of China are the traditional trading partners of Nepal before 1950. With the formation of democratic government, Nepal and India signed a trade treaty in 1950. Nepal’s trade with overseas countries started only from 1956 after the implementation of First Plan. As modernization was ushered in the country after democracy development of trade also grew tremendously. In order to promote exports an exporter’s exchange entitlement scheme was introduced in 1961. Under this scheme, raw jute was exported to a third country for the first time.

Nepal pursued trade diversification policy since early 1960s, which got momentum from Fourth Plan. Nepal has been successful to diversify the trade at least countrywise. In fiscal year 1974/75 India’s share in total trade of Nepal was 82.2 percent, while that of other countries was mere 17.8 percent. But in fiscal year 1997/98 India’s share in total trade was mere 31.0 percent while the share of other countries increased to 69.0 percent. However, in 2000/2001, share of other countries remained to 58.4 percent.

Since Eight plan, Nepal turned to open market economy and then adopted the policy of liberalization of foreign trade. In Nepal, new Trade Policy 1992 has been implemented. It aims to achieve the dynamic growth in the trade sector through the creation of more income and employment opportunities, attain favorable balance of payment situation by increasing exports and earning more foreign exchange.

At present Nepal has trade agreement with seventeen countries. However, it is trading with more than 80 countries of the world. The volume of trade has been constantly increasing due to development of transport and communication, participation in international trade fairs, membership of international organizations, liberal policy of third countries towards Nepal.

1 comments:

Unknown said...

I had a business for sale brisbane and the gentleman who bought it is from Nepal. Economically the country is doing much better than in previous years probably due to good governance.

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