Nine Hours in Cloud Nine

Indian Finance Minister Pranab Mukherjee's nine-hour sojourn to Kathmandu had economic as well as political significance. It was also a reinforcement of the goodwill gesture extended by New Delhi to Prime Minister Dr Baburam Bhattarai during his trip to the southern neighbour about a month ago. The happiness seen on the faces of both the hosts and the guests in Singha Durbar on Sunday was a strong indication that Nepal-India relations are indeed headed for good times.

IT'S A DEAL! Finance Ministers Pun (Right) and Mukherjee shake hands while PM Bhattarai (Center) is all smiles after signing DTAA.

IT'S A DEAL! Finance Ministers Pun (Right) and Mukherjee shake hands while PM Bhattarai (Center) is all smiles after signing DTAA.

As agreed during Dr Bhattarai's India trip from October 20 to 24, Indian Finance Minister Pranab Mukherjee made a brisk visit to Kathmandu on November 27 to sign the long-awaited Double Taxation Avoidance Agreement (DTAA) between the two countries. Finance Minister Barshaman Pun and his Indian counterpart Mukherjee signed DTAA in the presence of PM Bhattarai at the latter's office in Singha Durbar. Both the leaders expressed hope that the DTAA which replaces a similar agreement reached between the two countries in 1987 will help bring more Indian investment to Nepal. "The Bilateral Investment Promotion and Protection Agreement (BIPPA) signed during PM Dr Bhattarai India visit a month ago and the DTAA signed today are two key agreements which will help create a better investment environment in Nepal. The new DTAA is based on UN and OECD models," remarked Finance Minister Pun.

Mukherjee, too, expressed happiness over the revision of the 1987 DTAA between the two countries. "The revised agreement will provide tax stability to the residents of India and Nepal and facilitate mutual economic cooperation as well as stimulate the flow of investment, technology and services between India and Nepal," said Mukherjee, at a press conference organised at the Ministry of Finance.

Lawmaker and former Finance Minister Dr Prakash Chandra Lohani believes that the new DTAA has potentials of benefitting both India and Nepal. "Mukherjee's visit also carried a very important political message. It's a strong expression of India's firm support to the ongoing peace and constitution drafting processes in Nepal," he said.

Nepali private sector leaders, too, say that the agreement will boost the confidence of the investors and will help Nepal attract more investments from India. "This is a welcome agreement. But it will have to be implemented in practice. The Nepali businessmen and traders in India should get the same tax relaxations and privileges as their Indian counterpart in Nepal once the agreement goes into effect," said Pradeep Jung Pandey, Vice President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). Pandey, however, said that it was unfortunate that the Nepali side could not raise other outstanding issues such as new transit points, the controversial double lock on Nepali containers in Indian transit, and 4 per cent Central Sales Tax (CST) on Nepali exports in India with the Indian Finance Minister. "It's good that the government is trying to attract more and more foreign investment in the country. But it should also give priority to the local investors and industries," said Pandey.

Mukherjee who had arrived at the Tribhuvan International Airport at 11:30 in the morning left for New Delhi at around 8:30 in the evening. Before leaving, he called on President Dr Ram Baran Yadav, PM Dr Bhattarai, UCPN (Maoist) Chairman Pushpa Kamal Dahal, Nepali Congress President Sushil Koirala,CPN-UML Chairman Jhala Nath Khanal and Madhesi Janadhikar Forum (Loktantrik) Chairman Bijay Gachhadar. He also held discussions with Finance Minister Pun.