Om Prakash Khanal

February 22: Government authorities of India have instructed the stakeholders to facilitate Nepal’s foreign trade. The Central Board of Indirect Taxes and Customs (CBIC) of India issued such order to the service provider companies after Nepal-bound containers arriving from third countries started piling up at the Indian ports.

The board issued the order in the name of Container Corporation of India Limited (CONCOR), Pristine Mega Logistic Park and International Cargo Terminal and Infrastructure last week. The board has instructed the companies to make the required rail rakes available for transporting goods to Nepal from the Indian ports.

The transshipment cost of Nepal’s foreign trade was expected to be slashed down after the amendment to the Nepal India Railway Service Agreement, which allowed private companies to compete in the business. However, the Nepali importers are at the receiving end due to an unhealthy competition among the service providers.

The Nepal-India Railway Service Agreement was amended on June 29 last year. A private railway company from India transported goods to Birgunj Dry Port for the first time on September 15. Prior to that, CONCOR enjoyed monopoly in transporting goods to Nepal.

Currently, there are four companies in India, including CONCOR, that have been providing transportation service for Nepal-bound goods. Due to the competition from private sector, India’s state-owned CONCOR had reduced the transportation fare as well as rail rakes significantly. This had caused problems for Nepal’s import business as the private companies of India did not have adequate number of rail rakes to transport containers to Nepal.

CONCOR reduced the transportation fare by 30 to 35 percent. Other private companies were also forced to reduce the fare. However, CONCOR is still ahead of the private companies in terms of infrastructure and handles 90 percent of Nepal-bound shipments single-handedly taking advantage of the weak infrastructure of its competitors.

New Business Age had published a news on February 6 regarding the piling up of containers at Indian ports.

Chairman of Birgunj Chamber of Commerce Subodh Kumar Gupta said that the containers have been stuck at the Indian ports since the last two to four months due to unavailability of adequate rakes.

“We have done correspondence with Kolkata-based Nepali consulate regarding this problem. But the problem has not been resolved yet,” said Gupta.

Nepal has been relying on India’s ports in Kolkata, Visakhapatnam, and Haldiya for foreign trade. However, Nepal-bound containers have been stuck at the ports due to unavailability of rail rakes.

The problems faced by importers in Kolkata has now surfaced in Visakhapatnam, said Ashish Lath, secretary of the chamber.

Nepal’s Consul General in Kolkata Ishwar Raj Poudel said that the problem has been sorted out after holding talks with CONCOR officials.

Nepal imports around 125,000 containers of goods in a year. Currently, 4000 containers have been stuck at Visakhapatnam Port. This port, which is twice as far as Kolkata, has now become the first choice among Nepali importers. Although the distance is more, the cost incurred and delivery time are both less because big ships ferry the containers to Visakhapatnam.

However, the situation is tense due to the fierce competition among the service providers, says importer Pradeep Kedia.

 According to sources, CONCOR used to make a profit of IRS 12,000 for transportation of one container of goods. However, its profit has been reduced to IRs 5,000 per containers after adjusting the fare due to competition among the service providers. It has been learnt that CONCOR has been providing additional rail rakes for transportation of goods of Indian companies where it makes more profit than transporting goods to Nepal.

“Earlier, we were under compulsion to make the rakes available because it was our sole responsibility. But now, we are no longer responsible after the entry or private competitors. It is natural that we will provide rakes to those companies where we can make better profit,” said an official of CONCOR.

Earlier, CONCOR used to provide 65 rakes per month for transporting goods to Nepal but that has dropped to 38 at present.

Other companies are under pressure to increase rail rakes. According to B Mohan, executive director of Pristine Valley Dry Port, Pristine Mega Logistic Park has increased rail rakes to 13 per month.