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Nepali businesses bleed as Indian pilgrims keep away from Chinese border-crossing during Yatra

Nepal is an important route for Indian pilgrims traveling to Mansarovar lake

Kathmandu: Thousands of the Indian Hindu pilgrims used to travel to the holy Kailash-Mansarovar region in Tibet every year through the Tatopani border point of Nepal with China until the deadly earthquake struck Nepal in 2015.

The religious travellers would fill the hotels and restaurants close to the border point. Sensing the big business opportunity, Bishnu Shrestha, opened a 25-room hotel named Small Heaven in 2013, targeting basically the Indian pilgrims.

Before he recovered his investment of NPR 40 million spent to build the hotel, Nepal was hit by a deadly earthquake in 2015, which not only damaged roads, building and other infrastructure around Tatopani areas but also across the border on the Chinese side too.

Tatopani border point, which is also one of the two key international border points with China, remained closed for four years since the earthquake. In May 2019, the border was reopened for international trade. Before trade between the two sides made stride through this route, COVID-19 pandemic forced the authorities of both sides to close the border in January 2020 to prevent spread of coronavirus.

Since October that year, the border point was opened for one-way flow of Chinese goods to Nepal in a limited quantity.

“Before I recovered my investment, an earthquake hit the country and the border point has remained essentially closed ever since,” complained Shrestha. “So, our hotel has also remained open only in the name as hardly any tourists visit this area and stay in hotels here.”

Shrestha had to go through much hardship to pay the bank loans with the hotel being unable to generate enough cash flow from its operation of the hotel.   “The bank helped me in restructuring the loan and rescheduling the payment deadline when I was struggling to pay the loans,” he said.  He still has outstanding loans to pay as he continues to struggle for cash flow in the absence of the regular flow of the customers.

After the prolonged gap, Nepal and China are preparing to reopen this border point starting from Monday (May 1) for two-way trade. “We have one truck of handicraft ready to export to China through the Tatopani border point on Monday,” Dayananda K.C, chief customs officer at the Tatopani Customs Office told the India Narrative.

According to the Tatopani Customs Office, the Chinese side however would not allow the movement of people across the border.

“As per the latest agreement with the Chinese side, the goods from either side will be left on the friendship bridge connecting the two countries and the other side will take the goods. But the Chinese side did not allow the Nepali people to go across the border,” said Dayananda.

Before the earthquake in 2015, China used to provide one-day passes to visit the bordering Khasa (Zhangmu) market and return. A significant number of Nepali nationals had set up their own shops in the bordering town. Since the quake hit the bordering region, the Chinese side has already relocated the entire Khasa market to another location.

“There is currently no human settlement near the border point now. Only structure that the Chinese side set up near the border point is the building of their customs office,” said Dayananda.

But continued restriction on movement of the people from the Chinese side dashed Shrestha’s hope that he could operate his hotel business in full swing any time soon. “Without movement of people, how can we run the hotel? Shrestha asked.

Before the border was closed following the earthquake in 2015, his hotel rooms used to remain fully occupied most of the time. “Every day, 100-150 Indian pilgrims used to arrive in the Tatopani area and stay in hotels here,” Shrestha recalled. Now, Nepali people occasionally reach Tatopani (hot water pond) close to the border point.

“As the Nepalis don’t go to Tatopani frequently, the hotels here don’t have the source of regular income,” Shrestha said. According to him, there are a dozen hotels in and around the Tatopani area and the fate of all of them is similar. “The newer hotels suffered much because they had not recovered their investments,” he said.

The other international border point—Rasuwagadhi-Kerung, which is expected to be the main gateway between the two neighbours reopened for two-way traffic of goods starting from April 1.

The Chinese side had opened it for one way traffic of goods since April 2020 but traffic of only a limited number of goods were allowed to pass.

It is the border point through which the proposed Kerung-Kathmandu Railway is also supposed to pass through. There is also the proposal to construct the cross-border transmission line through this border point for future electricity trade between the two countries.

After nearly three years of disturbances, China on December 28, last year opened the Rasuwagadhi border point even for exports of Nepali goods following the northern neighbour scrapping the ‘Zero Covid’ policy. But China allowed movement of goods in limited quantities alone for the time being.

“Since April 1, there has been unrestricted movement of the goods from both sides,” Nararayan Prasad Bhandari, chief customs officer at bordering Rasuwa Customs Office, told the India Narrative. “The Chinese side now allows entry of people residing in bordering Rasuwa district, Nepali government employees and truck drivers who go to bordering Kerung town to take delivery of goods.”

It is also one of the routes for Indian pilgrims to go to the holy mountain of Kailash. “It is not immediately clear whether the border point was also opened for the people from the third countries,” said Bhandari.

After Tatopani and Rasuwagadi border point was closed by the Chinese side, Indian travellers have been using the Nepalgunj-Humla route in in the western Nepal, the shortest way to reach Kailash Mansarovar through the Himalayan country.

Lately, India opened the track of the link road from Dharchula to Lipulekh, a disputed land between Nepal and India. India has aimed to develop this route as Kailash-Mansarovar Yatra Route.

Even though Rasuwagadi border point was opened for one-way traffic of goods in April 2020 with occasional closure of the border point over the last three years, Nepali traders suffered badly because of limited clearance of goods from the Chinese customs authorities.

Before normal trade resumed in April this year, Nepali traders suffered huge losses due to quantitative restriction on movement of Nepal bound cargo from China. It took 16 months to clear all the Nepal bound goods which were stored in bordering Kerung town since the border point was closed in January 2020.

The goods ordered for major festivals like Dashain (Dussehra) and Tihar (Diwali) did not arrive on time from the north as China sent only limited cargo to Nepal. Nepali traders accused China of imposing an “undeclared trade blockade” on Nepal for delayed clearance of Nepal bound goods. But there is no evidence that China clearly had intent of blockading Nepal by imposing quantitative restrictions on cargo movement.

“Even after normal trade began in early April this year, China has continued to impose restrictions on the export of Nepal’s agricultural products such as rice, wheat flour, noodles among others,” said Bhandari.

Because of prolonged disruption for movement of goods through the land route, the majority of Nepali importers from China diverted their shipment to the sea route.  Most Nepal bound goods from China now are brought through Kolkata, India to Nepal.

“Along with disruption in smooth flow of Nepal-bound goods, Chinese container owners started to impose freight charges as high as NPR 10,000 per cubic metre of a container from only NPR 1800 per cubic metre,” said Nripa Adhikari, chairperson of Good Luck International, a freight forwarder.  “This situation forced many traders to divert their goods to the sea routes.”

Adhikari’s company had to pay for 20 cartoons of goods brought by his company for his client in Nepal after they were lost on the way. “We could not check physically by going to China about the goods were delivery in quantity as claimed by the Chinese seller,” he said. “My company had to compensate as much as NPR 700,000 to the Chinese seller for the lost goods.”

With the reopening of both international border points, Nepali importers will have more options to bring goods to Nepal.  “But there is still doubt among traders about Chinese policy as they close the border abruptly and it is not known when they close and when they open the border,” said Bachhu Poudel, former president of Nepal Trans Himalaya Border Commerce Association, a representative body of traders involved in Nepal-China trade. “We are hopeful no prolonged disruption in movement of goods through the land routes. But there is still a crisis of confidence with the Chinese authorities.”

During the first three quarters of the current fiscal year 2022-23 that began in mid-July last year, Nepal imported goods worth Rs 162.44 billion from China, according to the Department of Customs. Only goods worth NPR 28.14 billion were imported through these two northern international border points. Nepal exported goods worth NPR 636.83 million to China during the same period with NPR 273 million going through these border points, the customs statistics show.

“There will definitely be more trade through the land route once both border points are reopened fully,” said Poudel. “Nepali traders opt for the land route because they can take delivery of goods in a shorter period than the sea route.”

Also Read: Nepal, China to resume two-way trade via key border points