Around six dozen tea industries in eastern Nepal are at risk of closure because India has implemented a Standard Operating Procedure (SOP) that makes quality testing for tea exported from Nepal mandatory. Tea entrepreneurs argue that the time needed to meet these new requirements has significantly raised business risks.Although India introduced the new testing system on May 1, the issue gained wider attention a few days after Rabi Lamichhane, chairperson of the ruling Rastriya Swatantra Party and Foreign Minister Shishir Khanal visited India. It has led to questions being raised about the much-publicised “breakthrough” in bilateral relations the visit was expected to bring in.Bilateral trade is not a matter of merely calculating profits and losses; it is also an essential requirement to maintain continuity in relations between two nations. Every country has its own trade laws and regulations, which should help both sides manage potential challenges and disadvantages. However, not all difficulties can be addressed solely by policies and rules – practical considerations must also be taken into account.The crisis created by the India’s SOP reflects the need for such practicality. Industry stakeholders in Nepal cite the two-week time for test reports as an impracticable risk to their business since sales are not permitted during this period. And if samples fail, the tea must be destroyed or returned.Globally, relations between countries are increasingly shaped by geo-economics, economic partnerships and trade rather than by ideology, philosophy, politics or geopolitics alone. National security remains a top priority in mutual relations, followed closely by physical infrastructure and connectivity. Over and above these, economic growth, investment and employment opportunities, trade and commerce, supply chains, monetary policy and value chains play a key role in shaping the foundation and future direction of international relations.Also read: For Nepal’s Troubled Tea Industry, India’s Import Barriers Could Be a Death KnellIndia and Nepal are not only friendly neighboring countries but major trading partners. India accounts for about 65% of Nepal’s foreign trade. It is the principal trading partner in terms of both imports and exports. Nepal’s geography, surrounded by India on three sides and sharing a difficult mountainous border with its northern neighbour, has made its trade relationship with India particularly intensive. Though China is Nepal’s second-largest trading partner in terms of imports, its export potential towards China are limited. Thus, a distant-sky neighbour, the United States, has remained our second-largest export market.Nepal’s relationship with India is naturally close, shaped by geographical accessibility, ease of movement, shared cultural and civilisational heritage and strong people-to-people connections. This reality makes Nepal’s trade relationship with India unique. For decades, Nepal has maintained a stable exchange rate with India, which has ensured both monetary stability and trade predictability. While exchange rate adjustments are sometimes discussed, businesses, investors and consumers in both countries understand the uncertainty such changes could introduce. In this sense, the fixed exchange rate system serves as an advantage for Nepal’s economy rather than a constraint.Challenges come with opportunitiesIndeed, deep and extensive relationships often bring challenges along with opportunities. Greater closeness can also create new complexities. For this reason, bilateral agreements, understandings, laws and established practices need regular review and continuous improvement. Problems in trade processes do not necessarily reflect strained relations but may simply indicate a lack of readiness for smooth and efficient facilitation. This reality should be understood in the context of Nepal-India economic relations.The open border between both countries also strengthens daily economic engagement, continuing a centuries-old economic and trade ties. Both sides should work to further modernise, upgrade and adapt this relationship to contemporary needs while improving ease of cooperation.Based on my long experience working with the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), as well as its studies and findings over time, I believe both governments should focus on six key areas to facilitate trade more effectively.Infrastructure at border pointsPhysical infrastructure along the Nepal-India border is inadequately developed and yet to be modernised. While the open border and bilateral agreements facilitate cross border movement, there is a growing need to develop roads and bridges that accommodate freight, large lorries and trucks.Indian side at the Indo-Nepal International border in Madhwapur, April 28, 2021. Credit: Santosh Kumar, Sntshkumar750, CC BY-SA 4.0, via Wikimedia CommonsAs a landlocked country, Nepal has been granted access to the Indian ports of Kolkata, Haldia, and Visakhapatnam. However, there is still no dedicated railway link from these ports up to the border. This lack of dedicated connectivity increases transportation costs due to additional charges. Efforts to extend Indian freight rail services up to Nepal’s dry ports have also not been fully effective so far. In this context, the proposed Raxaul–Kathmandu railway, if realised, could be a game changer for cargo transportation.Slow customs processesThe integrated check posts (ICPs) between the two countries should be managed scientifically. Currently, even vehicles waiting in queue for customs clearance are required to pay parking fees. Delays in customs procedures increase costs, which in turn affect market prices. Therefore, customs clearance processes need to be made simpler and more efficient.Taxes such as GST at checkpoints should be removed. Considering the Indian government’s decision not to impose GST on exports to Nepal and Bhutan, its effective implementation should be ensured. Customs clearance offices should operate 24 hours to avoid detention problems. If freight vehicles wait for long hours at the border, it increases transportation costs. Moreover, vehicle charges should not be imposed on empty trucks returning after unloading goods on either side of the border.Also read: Nepal’s New Regime and India Should Not Ignore the Core Bilateral Issues that Need Resolution Through DialogueSecurity arrangements in customs areas, control of cross-border crimes, prevention of harassment of travellers on either side and control of illegal cross-border trade are equally important. The nearly 1,800-kilometer-long Nepal–India border has weak administrative control on both sides. It is not possible to establish checkpoints or customs offices at every point along such a long border. Therefore, joint patrolling, CCTV surveillance and other technological monitoring systems should be made more effective.Given the growing trade and interaction in border areas, it is necessary to strengthen the capacity of small customs offices and develop customs infrastructure. Recently, the Government of Nepal significantly reduced the number of small customs offices, the implications of which are under review.Mobility concernsMobility across the Nepal–India border needs to be made easier and more efficient. Border entry points should remain open from 4 am to 11 pm. This would reduce waiting time and costs for travellers in border areas, while addressing mutual security concerns and easing perceptions of insecurity.Similarly, reciprocity should be ensured for vehicle movement. Indian vehicles are allowed to enter Nepal by paying daily customs charges at the border, but Nepali vehicles must obtain special permission from the Indian Embassy in Kathmandu to enter India. A more balanced and reciprocal arrangement is needed.Direct air connectivity from Nepal’s Bhairahawa and Pokhara international airports to Indian cities would also significantly boost tourism in both countries. It would enable more flexible city-to-city travel planning. For instance, Indian tourists visiting Lumbini or Pokhara would not need to transit through Kathmandu, and Nepali travelers could directly fly to Indian cities when required. At present, Nepal has not been granted additional air entry points by India, making dialogue between the two governments necessary.Unequal trade practicesSeveral trade practices between Nepal and India need to be updated and simplified. For example, an online system for issuing certificates of origin for Nepali exports can be introduced. Quality testing laboratories and quarantine facilities must be adequate and modern.Issues such as credit transactions between traders, payment terms, quality assurance, return conditions and dispute resolution need a common legal framework ensuring equal justice for both sides. Similarly, sufficient authorised currency exchange centers should be established in both countries.Supply disruptions caused by raw material quotas and import-export restrictions should be eliminated, as it forces industries to shut down or operate below capacity. Aligning Nepal’s standards with Indian Bureau of Standards certification would improve market trust, simplify customs procedures and ensure quality assurance.Delays in laboratory testing of Nepali trademarks in India increase costs and reduce profits. Long-standing issues particularly affecting tea, cardamom, and ginger exports need long-term solutions.Additional ports requiredFor trade with third countries, Nepal has been granted access to Indian ports such as Kolkata, Haldia, and Visakhapatnam. If additional ports such as Mundra in Gujarat, Dhamra in Odisha and Mumbai are made available, it would further ease Nepal’s trade with third countries through India. The Indian side should consider this positively and both countries should resolve the matter through dialogue.Solution to tea export issueThe issue of Nepali tea sales and distribution in the Indian market is not new, but this time it has been taken up seriously in Nepal’s Parliament as well as at the diplomatic level between the two countries. Even after clearing customs, the Indian Tea Board has begun mandatorily collecting samples of Nepali tea from buyers’ warehouses in major trading hubs such as Siliguri and Kolkata.Due to laboratory testing reports taking 10 to 15 days and the prohibition on selling or distributing tea until results are received, the entire supply chain has been disrupted. According to available data, around 1.2 million kilograms of processed Nepali tea is currently stranded, 2,00,000 kg in Indian warehouses and more than 1 million kg within Nepal.This situation has severely affected Nepal’s tea industry. Due to lack of storage space and inability to pay farmers for green leaves, as many as 86 tea factories in Ilam and Jhapa are at risk of complete shutdown. In Suryauday Municipality of Ilam alone, about 2,995 farmers are engaged in tea cultivation, producing around 20 million kg of green leaves annually.The closure of tea industries means not only reduced farmer income but also job losses, investment risks, declining exports and a direct impact on foreign currency earnings.Testing procedures should be transparent, predictable and time-bound. A system must be ensured where Nepali tea meets international quality, food safety and residue standards for export. Quality testing should serve as a mechanism for market assurance, not a barrier to trade.According to the Tea Board’s revised regulation dated May 19, 2026, laboratory test reports are required to be issued within five days and risk-based sampling is applied to tea sold within India. However, in practice, delays stretching over several weeks, restrictions on sales and the accumulation of tea stocks in warehouses have created serious disruptions. This situation calls for an urgent diplomatic resolution.In conclusion, both countries should avoid delays in addressing policy, infrastructure and practical challenges in trade processes. For economic diplomacy to succeed, sustained, serious and proactive engagement from both sides is essential.This article was first published on Kantipur and has been republished with permission.Kreeti Khatiwada is assistant director, Federation of Nepalese Chambers of Commerce and Industry (FNCCI).