Rail Cargo movement between India and Nepal gets a big boost

What is the News?

India and Nepal have signed a Letter of Exchange(LoE) to revise the 2004 India-Nepal Rail Services Agreement(RSA).

What does the revised agreement contain?

• The revised agreement allows all authorized cargo train operators to utilize the Indian railway network to carry Nepal’s container and other freight – both bilateral between Indian and Nepal or third country from Indian ports to Nepal.
• The authorized cargo train operators include public and private container trains Operators, automobile freight train operators, special freight train operators, or any other operator authorized by Indian Railways.

Significance of this revised agreement:

• Firstly, it will allow market forces (such as consumers and buyers) to come up in the rail freight segment in Nepal and is likely to increase efficiency and cost- competitiveness.
• Secondly, it will reduce transportation costs for automobiles and certain other products whose carriage takes place in special wagons and will boost rail cargo movement between the two countries.
• Thirdly, the agreement is another milestone in India’s efforts to enhance regional connectivity under the “Neighbourhood First”

About Rail Services Agreement (RSA),2004:

• The Rail Services Agreement was signed in 2004 between the Ministry of Railways, Government of India and the Ministry of Commerce, Government of Nepal for introduction of freight train services between Birgunj (Nepal) via Raxaul (India).
• The agreement guides the movement between India and Nepal by rail.
• The Agreement shall be reviewed every five years and may be modified (through Letters of Exchange) by the Contracting Parties by mutual consent.
• Earlier Amendments: In the past, there have been amendments to RSA through LoE on three occasions.
  • First such amendment was in 2004.
  • Second LoE was signed in 2008 at the time of introduction of bilateral cargo between the two countries which required introduction of new customs procedures.
  • Third LoE was signed in 2016 enabling rail transit traffic to/from Visakhapatnam Port in addition to existing provision of rail transportation through Kolkata/Haldia Port.