Original Article

Year: 2014 | Month: July | Volume 59 | Special Issue

Indo-Nepal Trade Relations in Agricultural Commodities

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India and Nepal are the neighboring countries which have strong trade ties among themselves. More than 43% of total agricultural import of Nepal comes from India. The present study was undertaken to examine the present status and composition of agricultural trade between India and Nepal and impact of treaty on trade. The competitiveness and trade intensities were also analyzed. Revealed Symmetric Comparative Advantage (RSCA) was measured to find out the comparative advantage of India and Nepal in global market. It was found that after signing the treaty in 1996 India has emerged as a major trading partner of Nepal.The share of India in Nepal’s total export of agricultural commodities went up from 21% in TE 1995 to about 56% in TE 2011 . Comparative advantage was calculated for six agricultural commodities (jute, pulses, spices, wheat, tea and fresh vegetables). Over the years, the comparative advantage of jute exports of Nepal decreased and India outsmarted Nepal. Nepal had high comparative advantage than India in pulses export. Compound annual growth rate of pulse production in Nepal was found negative (-3%). Therefore, the comparative advantage in pulse export was because of export of processed pulses. The agro climatic conditions of Nepal favor tea production which was apparent from the compound growth rate of production (13.7%) and increasing positive values of comparative advantage It was concluded that the treaty has boosted the trade between India and Nepal. Therefore, it was suggested to maintain the treaty in the interest of both countries.

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