“Reimagining Indo Nepal relations” was the theme of the consultation organised at New Delhi on 26th March last by the India Nepal center of PHDCC at New Delhi under the guidance of KV Rajan who had served as the Indian Ambassador to Nepal in a critical period of time of Indo Nepal relations and Khaitan, the General secretary of the PHDC chamber of commerce. Nilambar Acharya, Ambassador of Nepal in India and Krishna Hari, Minister Economic of the Embassy of Nepal led the discussion attended by a diverse group representing trade, and expertise involved directly or indirectly in Nepal or interested in Nepal’s progress.
Initiating the dialogue Ambassador Rajan pointed out that in the backdrop of the unstoppable march of the globalization it’s time that India and Nepal adopted a mutually supportive development strategy and argued that in the ultimate analysis Geo economics shapes geopolitics. Ambassador Acharya stated that India and Nepal are uniquely positioned to work out such a compimentarity and stressed the importance of the ensuring Indo Nepal Business Summit at Kathmandu and invited PHDCC to play a lead role in attracting diversified Indian investment to Nepal apart from the traditional areas of Indo Nepal cooperation such as hydel power or road construction and other infrastructure projects. He reminded the group that creation of gainful employment opportunities for the youth by transforming the economy from the one driven by remittances which account for roughly 30% of Nepalese GDP of about US$ 246 in nominal 2017 US$ terms now to one producing value added products and services for the domestic as well as markets in Nepal’s SAARC neighborhood is the core of Nepalese Development strategy. Thus harnessing Nepal’s potential in Medium Small and Micro Enterprise sector and diversifying the service sectors while deepening and broadening its traditional strength in tourism, Ambassador Acharya said are the state priorities. In the discussion following ideas and suggestions emerged.
There is a huge scope for developing and upgrading the health care sector of Nepal by collaboration with the established Indian corporate players which could attract not only foreigners but also Indians from the neighborhood. This will need a coordinated approach involving the Indian states to cover the sub Himalayan region. The success of the Manipal group of Karnataka in establishing a high class medical college and hospital in Sikkim might be seen as a case of how outside expertise could help establish modern health care facility to serve not only Sikkim where it is located but also areas of east Nepal, Bhutan, north Bengal and even north east.
Quality school education was identified as a potential growth area in the consultation as presently the well off Nepalese like their counterparts in Bhutan send their children to boarding schools in Darjeeling and Kalimpong in West Bengal or Shillong even when with some good planning and investment Kathmandu and some towns of Nepal could emerge as ” education hubs” for the region opening up in the process employment opportunities for the educated youth.
Tourism, already the largest industry with a 7.5% share of the GDP earning US$472 million annually has vast untapped potential . As per official statistics 1.7million foreign tourists from Western countries visited Nepal last year- a big rise from 7.53 lakhs in 2016 and a sharp rise in the number of Chinese tourists: and this suggests the scope of expanding tourism infrastructure and especially Buddhist tourism circuits – a point stressed by MP Bezbaruah,former Tourism secretary government of India.
However development of these sectors being urban centric are unlikely to generate a growth momentum in the economy strong enough to uplift 65% of the population of about 3 crores who are in the rural areas – often in isolated habitats far away from the market and dependent upon agriculture and allied activities; and at times having a closer interaction with the areas across the border in Indian states.
This unique feature of Nepalese economy is apparent when one looks at the map and notes that Nepal’s geographical area of 147181sqkm is a part of the vast sub Himalayan region covering Bhutan and the Indian states of Sikkim, Bengal, Assam and North East region. In Geo economic terms Nepalese economy is integral to the economies of this subregion. The BBIN- Bhutan Bangladesh Nepal and India cooperation initiative is founded on this fact of interdependence. The substantial presence of ethnic Nepali in the entire region in the wake of introduction of the colonial mode of production and administration is in the present context an asset to promote greater economic interaction between Nepal and the north east for mutual progress . Thus from a geo economic angle, building a Nepal- Bengal- north east economic corridor for leveraging economic activities in Kathmandu-Siliguri- Guwahati- Imphal for reaching ASEAN seems not just desirable but a sub regional Development imperative well within India’s Act East Policy.
From this perspective, Tarai region’s untapped agricultural potential offers for regional demand driven crop diversification and agrobased industries. Nepal’s existing base in MSME sector in value added dairy products, cotton and synthetic textiles, hide and leather goods,jute products and medical herbs enabling her exports to rise to US$ 817.7 million in 2017 has huge untapped potential because of vast market for these products in the neighborhood. This has a bearing on future development as in 2017 Nepal’s imports were at US$11.03billion because of her dependence on imports of oil and petroleum products, medicines ,electrical machinery and equipments, which is really not sustainable unless export earnings go up substantially. The twin dependence on imports and remittances coupled with the low inflow of the Foreign Direct Investment which was a modest $198 million in 2017 have acted as severe constraints on growth.
Considering this position, the Honble Ambassador of Nepal urged the PHDCC to mobilse Indian investment in Nepal in the quick maturing projects having larger employment potential which could kick start the economy. He preferred joint ventures in sectors like agro forestry, fruit preservation in small and medium industries mode for quick value addition for a market that already exists in the subregion.
While broadly agreeing with this approach especially the need to create entrepreneural dynamism in Nepal through joint ventures a consensus was also reached at the consultation that to create an enabling environment for transition to a modern knowledge based economy in Nepal with a ” high technology intensity” production function in goods and services, that is, products and services in which ” value addition”is done mainly by application of science and technology inputs from its present low level, a new Science Technology and Innovation Policy is a strategic Development need for Nepal.
The STI Policy maybe designed to create a network of broad based science and technology NGO s capable of identifying ” technology needs and gaps” at the grass roots in rural areas and also at small and micro Enterprise levels in urban and Peri urban areas for reference to the concerned Research and Development institutions for appropriate technology solutions. For putting in place such a capability, science and technology system is to create and institutionalize industry academia linkage integral to the Nepalese Development strategy as in advanced countries like Japan and South Korea.
The task is difficult but not insurmountable. Kathmandu hosts ICMOD- the International Center for mountain Development, the world’s foremost multi disceplinary institution for development of mountaneous regions; and across the border in Dehradun, Almora and Pantnagar in Uttarkhand and at Izzatnagar in UP we have some of India’s foremost institutions for dealing with all scientific issues for sustainable development of Nepalese economy,it’s flora and fauna such as GB Pant Agricultural University, Pantnagar, Vivekananda centre for Hill agriculture at Almora, Forrest Reservation institute, Dehradun or The Indian Veterinary Research Institute at Izzatnagar in UP. With necessary will, the technology resource of the two nations could be harnessed to change the economy of the entire Sub Himalayan region and North East which shares many commonalities with Nepal could derive much benefit from these efforts. PHDC chamber of commerce could as well be a catalyst for the bold initiative.