In a significant step toward enhancing bilateral trade and regional connectivity, India and Nepal have signed a Letter of Exchange (LoE) amending the Protocol to the India–Nepal Treaty of Transit. Signed on November 13, 2025, the agreement aims to liberalize and expand rail-based freight movement, especially through the Jogbani–Biratnagar corridor, enhancing Nepal’s trade with India and third countries.
This development is key for India’s “Neighbourhood First” policy and Nepal’s efforts to gain better market access via Indian ports.
What Does the Agreement Include?
The signed LoE introduces the following key enhancements,
- Expanded Rail Transit Routes: Direct movement of containerized and bulk cargo is now permitted along the Jogbani (India) – Biratnagar (Nepal) rail corridor.
- Multimodal Transit Access: The liberalized definition of cargo movement applies to key Indian ports including Kolkata, Visakhapatnam, and their connectivity via Jogbani and Nautanwa (Sunauli).
- Third Country Trade Facilitation: The expanded route strengthens Nepal’s ability to trade more efficiently with countries beyond India using Indian port infrastructure.
- Enhanced Infrastructure: The Jogbani–Biratnagar rail link was built with Indian grant assistance, and officially inaugurated on June 1, 2023, by the Prime Ministers of both nations.
Strategic Significance for India and Nepal
For Nepal
- Ensures faster and cheaper logistics, particularly for bulk and industrial cargo.
- Improves access to global markets through Indian ports.
- Boosts regional integration and reduces trade costs.
For India
- Reinforces India’s position as Nepal’s largest trade and investment partner.
- Advances the “Act East” and “Neighbourhood First” policies.
- Enhances cross-border multimodal logistics infrastructure, supporting both trade and diplomatic ties.
Background: India–Nepal Trade and Connectivity
India and Nepal share a unique treaty-based trade and transit relationship. Some key highlights,
- India accounts for over two-thirds of Nepal’s external trade.
- The India–Nepal Treaty of Transit allows Nepal access to the sea through Indian ports.
- India has developed Integrated Check Posts (ICPs), rail corridors, and border infrastructure to simplify trade flows.
- Joint infrastructure projects have included road corridors, petroleum pipelines, and now, rail freight movement.
The LoE is part of a series of upgrades to India–Nepal connectivity arrangements aimed at facilitating smoother, faster, and more diversified trade routes.
Static Facts for Revision
- Date of LoE Signing: November 13, 2025
- Signed by: India’s Commerce Minister Piyush Goyal and Nepal’s Industry and Commerce Minister Anil Kumar Sinha
- Corridors Involved:
- Kolkata–Jogbani–Biratnagar
- Kolkata–Nautanwa (Sunauli)
- Visakhapatnam–Nautanwa (Sunauli)
- Type of Cargo Allowed: Containerized and bulk
- Nepal Customs Yard Location: Morang district, near Biratnagar
- India’s share in Nepal’s trade: Largest partner; accounts for major trade and investment flows
- Infrastructure Developed By: Government of India via grant assistance