EEC-Nepal hosts discussion on EU-India FTA impact on Nepal's key sectors

KATHMANDU: The European Economic Chamber (EEC) Nepal hosted a discussion session on Thursday in Kathmandu on the impact of the European Union-India Free Trade Agreement (FTA) on key sectors in Nepal.

The event featured Dipak Kumar Shah, Minister for Industry, Commerce and Supplies, as chief guest; Gunakar Bhatta, Vice-Chairman of National Planning Commission, as guest of honour; and Ambassador Charles Whiteley, Head of the Delegation of the EU to Nepal.

In his opening remarks, Minister Shah said, "To reform the export sector, we need to reduce the cost of production and improve productivity, establish an effective product certification system and implement a digital upgrade in the entire system." He added that Nepal cannot reform its export sector without increasing both domestic and foreign investment.

Ambassador Charles Whiteley said, "European consumers increasingly value origin, craftsmanship and sustainability, and they are willing to pay for these qualities."

The programme included a presentation by economist Nishant Khanal titled 'EU-India FTA: Impact on Key Sectors in Nepal — Opportunities and Challenges'. Khanal outlined the main elements of the agreement and set out implications and possible next steps for Nepal.

Khanal said cross-border power trade and India's rising industrial demand make Nepali hydropower a prime blending opportunity through the European Investment Bank and KfW Germany, aligned to the GREEN+ portfolio, and added that 'hydropower has a green advantage.'

He warned that Nepal's textile exports will suffer from the FTA's implementation, estimating the sector will face a loss of $7 million by the end of the agreement. He noted that branding, design, certification and quality upgrading for high-value, identity-linked products such as pashmina, orthodox tea, cardamom and medicinal and aromatic plants can expand opportunities for Nepal.

The presentation was followed by commentaries from sector experts and a question-and-answer session. The EEC-Nepal event highlighted Nepal's Least Developed Country (LDC) challenges, the need for investment reforms, the likely impact on textile industries and the potential of hydropower.