Importers in Nepal can at last ship third-country goods in through Visakhapatnam (Vizag) Port in India.

This is because commercial banks have finally received a directive authorising them to issue letters of credit (L/Cs) to clients using the port.

Slow progress

India allowed Nepal to use Vizag Port for third-country trade in February, but traders have not been able to take advantage of its benefits because banks were barred from issuing L/Cs for goods entering the country via the new trade corridor.

In July, Nepal's ministry of commerce notified the Nepal Rastra Bank (NRB) that banks could now authorise L/Cs with documents naming India's Vizag Port as a destination for imports into Nepal (DC World News, 8 July 2016).

Open for business

NRB, the central bank, has now issued a directive authorising Nepal's commercial banks to issue L/Cs to clients using the port.

Goods arriving at the port can then be shipped to other destinations in Nepal via road or railway according to the directive.

Benefits

Landlocked Nepal has so far relied on the Indian port of Haldia (Kolkota) as the only port where arrangements can be made for the payment of third-country cargoes destined for the Himalayan state.

At 1,440km, Vizag Port is twice as far from Nepal as Haldia Port, but it offers distinct advantages. Unlike Haldia, it can handle containers and consignments and is connected to superior rail and road links.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.