Madhav Kumar Nepal, Prime Minister of Nepal, paid an official visit to India from 18 to 22 August 2009 at the invitation of Dr. Manmohan Singh, Prime Minister of India. He was accompanied by Mr. Sharat Singh Bhandari, Minister for Tourism and Civil Aviation; Mr. Rajendra Mahto, Minister for Commerce and Supplies; Mr. Surendra Pande, Minister for Finance; Dr. Prakash Sharan Mahat, Minister for Energy; and Mr. Mahendra Prasad Yadav, Minister for Industry. The delegation also included Members of the Constituent Assembly, senior officials of the Government of Nepal, a business delegation and a delegation of media representatives.

The Prime Minister of Nepal called on Pratibha Devisingh Patil, the President of India, and Mohammad Hamid Ansari, the Vice-President of India.

The Prime Minister met on August 19 with his Indian counterpart, which was followed by delegation level talks led by the two Prime Ministers, on issues of mutual interest and concern. The Prime Minister of India Dr. Manmohan Singh hosted a banquet in honour of the Prime Minister of Nepal and Mrs. Gayatri Nepal. The Prime Minister of India extended a warm welcome to the Prime Minister of Nepal. The two Prime Ministers warmly recalled their meeting in Sharm El Sheikh, Egypt, on 16 July 2009 on the sidelines of the 15th NAM Summit. They expressed their satisfaction regarding the age-old, close, cordial and multi-faceted relations existing between Nepal and India and agreed to expand these further. The talks were held in an atmosphere of utmost cordiality and warmth.

The two Prime Ministers expressed their satisfaction at the state of bilateral relations between the two countries and resolved to work together to further strengthen and enhance cooperation consistent with the wishes and aspirations of the people of both countries. Reiterating the importance of the cordial and multi-faceted relationship between Nepal and India, the two Prime Ministers reaffirmed their determination to consolidate and expand the areas of cooperation with a view to taking the relationship to a new height on the basis of mutual respect, understanding and mutual benefit.

S.M. Krishna, External Affairs Minister; Pranab Mukherjee, Finance Minister; and P. Chidambaram, Home Minister, called on the Prime Minister of Nepal. The Prime Minister of Nepal met with Sonia Gandhi, Chairperson of the United Progressive Alliance (UPA) and the President of Indian National Congress. An interaction with the Indian business community was jointly hosted by ASSOCHAM, CII and FICCI in honour of the Prime Minister of Nepal and his delegation on 19 August. During his stay in India, the Prime Minister visited Mumbai between 21 & 22 August.

Peace Process

The Prime Minister of Nepal stressed that bringing the peace process in Nepal to a positive and meaningful conclusion in coordination and cooperation with all concerned parties, writing a new Constitution within the stipulated time frame and accelerating the pace of economic development are the main priorities of his Government. The Prime Minister of India expressed full support for the ongoing peace process and efforts to bring about economic transformation in Nepal.

The two Prime Ministers agreed on the need to reinvigorate bilateral relations in all areas and directed that all the established institutional bilateral mechanisms should function effectively, in time bound manner and lead to concrete outcomes for the benefit of both countries.

Trade Issue

The two sides agreed that enhancing trade between Nepal and India was a priority for both countries. Both sides agreed that the Inter Governmental Committee (IGC) at the level of Commerce Secretaries should look into the relevant issues with a view to promoting trade, investment and industrialization in Nepal, expanding complementarities of bilateral trade on a sustainable basis and further removing barriers to trade and investment. The two Prime Ministers directed that the IGC should meet within the next two months. The two sides completed negotiations and initialed the revised Treaty of Trade and Agreement of Cooperation to Control Unauthorized Trade, which would contribute to further enhancing bilateral trade.

To facilitate Nepal’s foreign trade, India agreed to the utilization of its port at Vishakhapatnam for movement of transit traffic to and from Nepal. It also expressed willingness to favourably consider request for usage for trade purposes of an additional sea port on its western coast.

The Nepalese side expressed satisfaction for the Indian assistance to control Goitre and other forms of Iodine Deficiency Disorders. The Foreign Secretaries of India and Nepal signed a MoU regarding continuation of Indian grant assistance for the Goitre control programme in Nepal.

Indian Investments

The Nepalese side informed that the Government of Nepal will take further necessary measures for the promotion of an investor friendly and enabling business environment to encourage Indian public and private sector investment in Nepal, and a Bilateral Investment Promotion and Protection Agreement would be concluded and signed at an early date. The Indian side would encourage its business and industrial community to increase investment in Nepal. The two sides expressed satisfaction at the growing commercial relationship between the two countries but agreed that there was much untapped potential. In order to further deepen the economic engagement and utilize the full potential for such cooperation that exists between the two countries, it was agreed that a new Agreement on Avoidance of Double Taxation would be concluded and signed at an early date.

The two sides discussed security concerns relating to the open border between the two countries. The Nepalese side assured that it would not allow its territory to be used for any activity against India and the Indian side also gave the same assurance. It was agreed that the Bilateral Consultative Group on Security Issues and the Home Secretaries of the two countries will meet within two months to enhance bilateral cooperation to effectively address all issues concerning security, including cross-border crime, and establishing effective communication links between and along the bordering districts to further facilitate the exchange of information. The two sides agreed to consider steps to further facilitate cross-border arrangements in order to resolve border related issues and to assist local populations in the border areas on both sides. The two sides also stressed on the need for strengthening the legal framework, in order to counter their common cross border security challenges.

The Nepalese side expressed appreciation of India’s contribution for the development of BP Koirala Institute of Health Sciences at Dharan and its support in providing Indian faculty with Indian Rs.5 crores for a further period of two years. The Nepalese side highlighted the need for human resource development, particularly vocational training in the Central region. The Indian side conveyed that they would commence the construction of a polytechnic at Hetauda at a cost of approximately Indian Rs.22 crores.

Rail Link

To improve rail connectivity between the two countries, two cross-border rail links would be constructed with Indian assistance at two points along the India-Nepal border at an estimated cost of Indian Rs.680 crores at Jogbani-Biratnagar (18 km), and Gauge conversion of Jayanagar to Bijalpura (51 km) and extension of the same to Bardibas (17 km). Both sides will strive to complete the work expeditiously.

For accelerated development of financial markets in Nepal the Government of India would provide technical assistance for establishment of a Central Depository System (CDS) in Nepal at an estimated cost of Indian Rs.9.2 crores towards consultancy, development of application software and training. Relevant stakeholders in Nepal such as the Nepal Stock Exchange Limited (NEPSE) are to provide the necessary infrastructure for the System. Completion of the project is envisaged within a year.

In response to a request from the Nepalese side for enhancing scholarships in order to further assist with human resource development in Nepal, the Government of India agreed to double the number of scholarships. The Government of India also agreed to increase the number of slots for training and exchange programmes for Government of Nepal officials, including police personnel, to further strengthen capacity building and expand interaction between the civil servants of the two countries.

Kosi River

Both sides expressed satisfaction over the timely completion of the technically challenging task of the closure of the breach of Kosi embankment last year. They stressed the need for constant vigil and continuous maintenance, as well as other necessary measures so as to avoid the recurrence of such incidents in the future. They decided to take up preventive measures for the Gandak and other barrages under the existing bilateral arrangements. The two sides also discussed the problem of inundation in the border areas between Nepal and India and agreed that the Joint Ministerial Commission on Water Resources should address these issues regularly, and the agreed work would be implemented expeditiously.

In order to accelerate the implementation of Pancheshwar Multi-purpose Project, the two Prime Ministers directed the Joint Ministerial Commission on Water Resources and Joint Committee on Water Resources to expedite the finalization of Terms of Reference for Pancheshwar Development Authority and the Detailed Project Report of the Pancheshwar Project.

Power Sector

The Prime Minister of Nepal conveyed that the Government of Nepal planned to generate 25,000 MW of hydro-electricity in the next twenty years, and sought India’s active participation in the development of this potential. The two sides agreed to facilitate increased Indian public and private sector involvement to harness Nepal’s hydropower potential. Both sides also agreed to expedite progress on the Sapta Koshi High Dam and Sunkoshi Diversion Project and the Naumure Project as per bilateral discussions. Both sides also agreed to expedite the construction of Dhalkebar-Muzaffarpur 400 KV cross border transmission line for which the modalities are to be developed. In order to facilitate power trade in the short run, Indian side agreed to examine the Nepalese request for improving the transmission lines in three border areas.

In response to a request from the Nepalese side for the removal of ban on the export of essential commodities from India to Nepal, the Indian side conveyed that the issue would be considered on receipt of specific proposals.

Climate Change

Climate change is an issue that directly affects the ecological resources of India and Nepal. Glacial meltdown in upper reaches of Himalayas and the gradual ecological degradation of the Chure-Bhawar range are leading to natural disasters in the form of floods which are a common threat to both our countries. Both sides agreed to undertake joint scientific collaboration between India and Nepal in hydrological and glaciological study of the impact of climate change for mutually beneficial cooperation.

The Prime Minister of Nepal renewed the invitation to the Prime Minister of India to pay an official visit to Nepal at an early date. The Prime Minister of India accepted it with pleasure. The dates of the visit will be decided through diplomatic channels.