Sarat Chandra IAS Academy

Rail Cargo movement between India and Nepal gets a big boost.

Rail Cargo movement between India and Nepal gets a big boost.

#GS2 #Bilateral Relations #GS3 #Infrastructure

Context: India and Nepal have signed a Letter of Exchange (LoE) to the India-Nepal Rail Services Agreement (RSA) 2004.

Highlights of LoE:

  • It will allow all authorized cargo train operators including public and private container trains Operators, automobile freight train operators, special freight train operators or any other operator authorized by Indian Railways to utilize the Indian railway network to carry Nepal’s container and other freight – both bilateral between Indian and Nepal or third country from Indian ports to Nepal.
  • Wagons owned by Nepal Railway Company will also be authorized to carry Nepal-bound freight over the Indian Railways network as per IR standards and procedures.

About Rail Services Agreement (RSA), 2004:

  • The Rail Services Agreement was executed in 2004 between the Ministry of Railways, Government of India and the Ministry of Commerce, the Govt. of Nepal for introduction of freight train services between these two countries to and from Birgunj (Nepal) via Raxaul (India).
  • The agreement guides movement between India and Nepal by rail.
  • The Agreement shall be reviewed every five years and may be modified (through Letters of Exchange) by the Contracting Parties by mutual consent.
  • In the past, there have been amendments to RSA through LoE on three occasions.
  • First such amendment was in 2004.
  • Second LoE was signed in 2008 at the time of introduction of bilateral cargo between the two countries which required introduction of new customs procedures.
  • Third LoE was signed in 2016 enabling rail transit traffic to/from Visakhapatnam Port in addition to existing provision of rail transportation through Kolkata/Haldia Port.

Benefits of the Latest Agreement:

  • This liberalization will allow market forces (such as consumers and buyers) to come up in the rail freight segment in Nepal, and is likely to increase efficiency and cost- competitiveness, eventually benefiting the Nepalese consumer.
  • Transportation costs of automobiles, other products carried in special wagons will decline.
  • It will boost rail cargo movement between the two countries.
  • This LoE marks another milestone in India’s efforts to enhance regional connectivity under the “Neighbourhood First” policy.

Other Connectivity Projects:

  • Connectivity projects come in various forms.
    • Physical connectivity projects such as highways, rail and air links and inland waterways enhance movement of goods and people.
    • Energy connectivity – whether power transmission lines or petroleum pipelines – contribute to the well-being of each other’s citizens, and build mutual trust and partnerships.
    • Digital connectivity through optical fibre networks, will provide remote access to education, healthcare and other services through the digital medium.
  • Nepal being a landlocked country has very limited vehicular access.
  • MoUs have been signed between both the governments for laying an electric rail track linking Kathmandu with Raxaul in India.
  • India is looking to develop the inland waterways for the movement of cargo, within the framework of trade and transit arrangements, providing additional access to sea for Nepal calling it linking Sagarmatha (Mt. Everest) with Sagar (Indian Ocean).
  • In 2019, India and Nepal have jointly inaugurated a cross-border petroleum products pipeline.
  • Pipeline carries petroleum products from Motihari in India to Amlekhgunj in Nepal.
  • This is South Asia’s first cross-border petroleum products pipeline.   
Rail Cargo movement between India and Nepal gets a big boost
Rail Cargo movement between India and Nepal gets a big boost

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