Tuesday, February 21, 2012

Estimates of informal agriculture trade between Nepal and India

The official data shows that out of total merchandise exports of Rs 64 billion in fiscal year 2010/11, export to India was Rs 43.36 billion (around 67.63 percent of total merchandise exports). This covers official data only. A recent estimate shows that the value of informal imports of agriculture goods alone from India is close to Rs 54.75 billion.

Meanwhile, the estimated value of Nepal’s informal agriculture exports to India is estimated to be Rs 9.86 billion. In total, the value of informal agriculture trade between India and Nepal is close to Rs 65 billion. The data is based on a recent survey (perceptional survey with informal traders, government officials, carriers and knowledgeable persons) along the major adjoining border towns -- Kakarbhitta, Biratnagar, Birgunj, Bhairahawa and Nepalgunj.

The cause for opting for informal channels: tariff differential on third country goods between Nepal and India (and its reflection on retail prices), export restriction of certain agriculture products by India, additional duties and non-tariff barriers are some of the factors, and hassle at custom points.

Here is more:

  • Birgunj customs accounts for 60 percent of total informal import of farm products, followed by Biratnagar and Nepalgunj customs with share of 14 percent and 11 percent respectively. Such trade at Kakarbhitta and Bhairahawa customs stands at 9 and 6 percent of total informal trade of agro-products respectively.
  • Informal import of farm products through Birgunj and Biratnagar customs was worth Rs 32.65 billion and Rs 7.46 billion respectively. Similarly, agricultural products worth Rs 5.07 billion, Rs 5.91 billion and Rs 3.63 billion were estimated to have been imported through informal channels via Kakarbhitta, Nepalgunj and Bhairahawa customs respectively.
  • Paddy is the major agriculture item imported through informal channels from India. Its share in total informal agriculture imports from India stands at around 27 percent. Similarly, rice (21 percent), sugar (12 percent), edible oil (8 percent), and lentil, fish, poultry, powdered milk and oilseeds (3-4 percent) are the other agriculture products imported from India through informal channels.
  • Informal exports through Biratnagar customs account for half of Nepal´s informal exports of farm products to the southern neighbor, followed by Biratnagar (around 30 percent). Nepalgunj, Kakarbhitta and Bhairahawa customs come third, fourth and fifth in the list.
  • Betel nuts top the list of farm products traded through informal channels. It accounts for 47-52 percent of Nepal´s total farm exports to India, followed by hides and skins (18-21 percent), apple (11-12 percent) and garlic (11-12 percent).
  • Informal trade of ginger, orange, big cardamom, onions, turmeric, pig, poultry, powdered milk and jute products is on the rise.