India and Nepal sign three key agreements to boost bilateral ties
Nepal PM Baburam Bhattarai (left) and PM Manmohan Singh have agreeed to boost economic ties.
Heralding a new era in bilateral economic ties, India and Nepal inked three key pacts on Friday. India extended a Line of Credit (LoC) worth $ 250 million to boost infrastructure projects in Nepal and signed a much expected investment protection pact with the Himalayan state to promote bilateral businesses.
An MoU for Indian grant assistance to the Goitre Control Programme in Nepal was also inked.
On the busy second day of his visit to India, Nepalese PM Baburam Bhattarai held wide-ranging talks with PM Manmohan Singh, in which the issue of the ongoing peace process and proposed formula integration of Maoist combatants into the Nepal army figured prominently.
At the end of the nearly two-hour talks, where security cooperation also figured, the two countries signed the three agreements.
Nepal PM Baburam Bhattarai meets Indian industrialists.
Nepal PM Baburam Bhattarai meets Indian industrialists.
It is understood that Bhattarai urged support for other projects crucial to Nepal's infrastructural growth. The Maoist leader also sought a soft loan of $ 1 billion for the construction of the Tarai fast track road, and requested India's help in building a new airport in Kathmandu.
Among the deals, the most prominent is the LoC that will be used to finance infrastructure and hydropower projects in Nepal. It will carry a concessional rate of interest of 1.75 per cent per annum and a repayment period of 20 years, inclusive of five years moratorium.
India had agreed to extend the LoC in February 2010, during the visit of Nepalese President Ram Baran Yadav.
The signing of the Bilateral Investment Promotion and Protection Agreement (BIPPA) is a welcome boost to Indian investors keen to tap into Nepal's resources.
The agreement seeks to promote and protect investments from either country in the other's country, with the ultimate objective of increasing bilateral investment flow. The term investment includes every kind of asset, including intellectual property rights.
Provisions have been made in the BIPPA for grant of compensation to the investors who suffer losses because of war, armed conflict, a state of national emergency, etc.
Such investors shall be accorded treatment by the host country no less than the treatment accorded to its owns investors or to the investors of any third state.
The agreement provides for an elaborate mechanism to resolve disputes between the investor and a host government, as well as between the two governments. The BIPPA shall be in force for a period of 10 years initially.
The provisions are seen as critical in protecting the interests of Indian investors and official sources in Delhi hoped that BIPPA would be implemented fully and not remain a mere document.
It has been learnt that India discussed with Bhattarai the status of two hydel power projects being built by India's private power firm GMR. India has been seeking assurance from the Nepalese government for the safety of the GMR's workers and staff on the Upper Karnali and Upper Marshyangdi hydel power projects. The signing of the BIPPA is significant in this case.
However, in Kathmandu, former deputy PM K. P. Sharma Oli created a row by saying that Bhattarai kept the Nepalese political parties in the dark over the agreement. Earlier on Friday, Bhattarai's meeting with UPA chairperson Sonia Gandhi was postponed because of her ill health, but he met a host of other leaders, including the foreign and finance ministers, President Pratibha Patil, Vice-President Hamid Ansari and Lok Sabha Opposition leader, Sushma Swaraj. He also visited Rajghat.
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