With a single agreement in using the Indian railway to ferry goods between Nepal and India, and for Nepal, with other countries, some hassles used to be there. To make things easier, India has agreed to provide more options to Nepal.

In this context, Nepal and India have signed a Letter of Exchange (LoE) on the India-Nepal Rail Services Agreement (RSA) 2004. A virtual ceremony was held on 9 July 2021 to exchange Notes Verbales and signed copies of the LoE, between the two governments.

This agreement will help Nepal’s exporters and importers to ferry goods in much cheaper transport costs. This means Nepalese consumers will get the goods for a cheaper price.

From the Indian side, the ceremony was led by Sanjay Kumar Mohanty, Member of Operations and Business Development, Ministry of Railways. From the Nepalese side, it was led by Dinesh Bhattarai, Secretary, Ministry of Commerce, Industry and Supplies.

According to a press release issued by the Embassy of India in Kathmandu, the ceremony was conducted in presence of Ambassador of India to Nepal Vinay Mohan Kwatra, Ambassador of Nepal to India Nilamber Acharya, Joint Secretary (North), Ministry of External Affairs of India, Anurag Srivastava and Joint Secretary (South Asia), Ministry of Foreign Affairs of Nepal, Tirtha Raj Wagle. Also present were representatives from the two Embassies and concerned Ministries of both the Governments.

With the entering into force of the LoE, all authorized cargo train operators which includes public and private container trains operators, automobile freight train operators, special freight train operators or any other operator authorized by Indian Railways will be able to utilize the Indian railway network to carry Nepal's container and other freight – both bilateral between India and Nepal or third country from Indian ports to Nepal.

This liberalization will allow market forces to come up in the rail freight segment in Nepal, and is likely to increase efficiency and cost-competitiveness, eventually benefiting Nepalese traders, transporters and the consumer.

Further, after this LoE, all kinds of cargoes in all categories of wagons that can carry freight on Indian Railways network within India can also carry freight to and from Nepal.

The liberalization will particularly reduce transportation costs for automobiles and certain other products whose carriage takes place in special wagons. Wagons owned by Nepal Railway Company will also be authorized to carry Nepal-bound freight (inbound and outbound on Kolkata/Haldia to Biratnagar/Birgunj routes) over the Indian Railways network as per IR standards and procedures.

The LoE also updates several other portions of the India-Nepal RSA and brings those in line with latest operational and infrastructure status of Indian and Nepalese Railways. It therefore marks another milestone in India’s efforts to enhance regional connectivity under the “Neighborhood First” policy.