Bhutan Bangladesh India Nepal (BBIN) – The Nepal Connectivity, Trade and Investment

 The Indo-Nepal Treaty of peace and friendship of 1950 known as Roti-Beti ka Rista (Marriage and food relations) is a relation based on open border, power trade and defence.

The thriving cross border trade with shared culture and traditions speaks volumes of the close relationship between India and Nepal. History has recorded that both countries hold a special relation when it comes to connectivity, trade, defence cooperation, and humanitarian assistance.

The five Indian states that share the 1850 kms border with Nepal are Sikkim, West Bengal, Uttarakhand, Bihar and Uttar Pradesh but Nepal’s connectivity with India’s North East is equally significant.

The open border enables regular and uninterrupted movement of people, goods and services  more than government schemes and trade. The close community relationship among the people provides better livelihood opportunities in many sectors including emergency services.

An estimated over eight million Nepalese people work in India in various sectors such as hospitality, manufacturing and production. Nepalese soldiers in the Indian army’s Gorkha regiment are said to be roughly over thirty-two thousand.

India is Nepal’s largest trading partner with estimated over 60% Nepal’s trade volume in 2026. Key exports include iron and steel, automotive components and petroleum products to name a few.

In my opinion the following issues need to be highlighted –

1)     Trade and Transit arrangements need a proper and thorough rethink as sales of goods and payment moves through electronic medium, which can provide more innovative and opportunities for business on either side of the border.

2)     The Bilateral Investment Promotion and Protection Agreement (BIPPA) signed between both countries need more across the table discussion to attract more investments from India.

3)     With the new Renewable Solar projects coming up in India, hydropower is the only source that can manage peak demand in India. So, by buying power from Nepal, India will save billions of investments in building new plants which will also save India from major pollution issues. Nepal has committed to export up to 10,000 MW to India over the next decade.

4)     The onus is on Nepal to create a congenial environment that sends a clear message that Nepal is open to foreign investments. For a landlocked county like Nepal, access to global markets through India is necessary to increase multi modal connectivity of road, rail and inland waterways. The Jayanagar-Kurtha cross border railway is a positive step towards connectivity.

5)     The multiple Integrated Check post such as Raxaul-Birgung-Jogbani-Biratnagar will expedite trade. Recently, in June 2026, both countries launched the UPI-NPI linkage which will enable P2P remittance. This is a positive step for smooth cross border payments.

6)     To strengthen Trade, Economic and Commercial ties with the existing Inter – Government Commission (IGC) meetings.

7)     The Joint Business Forum (JBF) should be more effective as a platform for business from either side for Trade and Investment.

8)     The Joint Working Groups (JWG) to highlight issues of online Certificate of Origin, transit issues relief to movement of goods.

 

If the above issues are addressed by both governments at the right time, connectivity, trade and investment between India and Nepal will flourish in the coming years.

 

Shah Md. Farid

Trade & Investment Consultant

Founder Director, Northeast India - ASEAN Chamber of Commerce

neiaseancc@gmail.com

+91 98640 28318

+66 850 986 141

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