The two countries have a bilateral transit treaty. India has imposed a 4.5 per cent service tax on ocean freight costs. Although the tax had been introduced for Indian importers, Nepali traders are having to pay it too as they fully rely on Indian clearing agents to handle shipments from third countries unloaded at Indian ports. These agents have been passing on the additional charge to Nepali importers, making third country imports shipped through Indian ports costlier.

Ocean freight costs vary depending on the distance of the port where the shipment originates. Ocean freight costs from China to Kolkata for a 20 ft. container range from $600 to 1,600. Charges range from $3,700 to 4,500 for a 20-ft. container originating in the US. Since taxes are imposed on freight costs, Nepal-bound goods unloaded at Indian ports have become costlier.

Nepal has also requested India to remove the anti-dumping duty imposed on Nepali jute and jute products. The anti-dumping is valid for five years and has been imposed on jute yarn and twine, hessian fabric and jute sacking bags in all forms and specifications.