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.

Source:
Ziraat Times
Economic Times
DD India