Nepal is keenly looking to open Visakhapatnam Port in Andhra Pradesh as an alterative route to do business with third countries. At present, its foreign trade is hugely dependent on the Haldia Port in West Bengal.

In 2009, the Indian government had approved Visakhapatnam Port as a second shipment point for handling container cargo from Nepal.

"This port is efficient, effective and ultra-modern, fully equipped with computerized system," said Sushil Mulchandani, chief operating officer of Visakha Container Terminal Private Limited, addressing the Nepal-India Business Conclave on "Visakhapatnam Port: Additional Gateway for Nepal's Export Import Traffic" here.

He said the port would be more feasible for Nepali traders in terms of efficiency and cost compared to Kolkata port. He also claimed that the Nepali traders could check the status of their containers inside the port from Nepal by visiting the company's website.

Mulchandani said his company could arrange road and rail transportation up to Nepal's border from the port, adding, "there will be no additional or hidden charges to Nepali containers".

Given the increment in the volume of Nepal's trade and the appropriateness of the Visakhapatnam port, he explained, the governments of Nepal and India should include the port in their trade treaty.

But Nepali officials maintain that the Nepal-India Transit Treaty, which was renewed last year without any changes, made it impossible for Nepal to use the port.

Former commerce secretary Purushottam Ojha said that for all the advantages the port boasts, Nepali traders are not in a position to use it with no letters of credit yet being exchanged between the two governments to implement Railway Service Agreement and Nepal-India Transit Treaty.

While preparing for the renewal, Nepal had asked India to provide access to five more trade and transit routes between Vishakapatnam sea port and four major customs points, rail route between Birgunj dry port and Vishakapatnam, and Rohanpur-Singhabad-Jogbani and Phulbari-Banglabandha routes.

But the treaty was renewed in the first week of this January without any changes. India and Nepal are locking horns over Additional Lock System (ALS) that India has been imposing on Nepal-bound cargo for more than two years which is one reason that the Nepali side could not benefit from the Indian offer.

India had requested Nepal to formalize the additional lock system it had begun on cargo bound for Nepal from third countries via its Kolkata/Haldia ports and vice-versa beginning Aug 1, 2011, arguing that such cargo were often found "tampered with and locks broken".

For its part, the Indian side had demanded that the goods be moved from one part of India to another via Nepal through a simple customs undertaking. The Nepali side was positive on this proposal. Since 1993, India has allowed the movement of goods from one part of Nepal to another via India through the same process.

As both sides failed to amend the Transit Treaty addressing each other's demand and concern, Nepal and India could not exchange the Letters of Exchanges (LoE) on these issues. As a result, Nepal could not use the Visakhapatnam Port immediately.

Nepal's transit trade is routed through 22 designated routes from India-Nepal border to the port of Kolkata/Haldia. In addition, Nepal's trade with and through Bangladesh also transits through India.