International Trade Practices & Trade

Financing Provisions in NepalBy:• Chhitiz Shrestha• Mintira Lama• Samyak Shakya• Sushan Byanjankar

Trade Finance Group Project

Work

Introduction to Int’l Trade Buying and selling of large number of

goods and services between countries Any buying and selling of goods that takes,

with the return of financial compensation such as money or money’s worth is referred to as trade.

Trade is taken as an effective tool to reduce poverty in the country and to enhance the wellbeing of the marginalized people.

Introduction to Int’l Trade International trade is the exchange of

capital, goods, and services across international borders or territories. 

It has high economic, social, and political importance.

Objectives To learn about the

International Trade practices in Nepal.

To learn about the Trade financing provisions.

To learn about the practices in trade prevalent in the country.

Limitations Making generalization on the basis of

the findings of the project may not be correct.

Limitations in the time for preparation have brought major constraints, a more time allotment could have brought greater results.

Limitation in the information availability.

Methods of Payment Cash in Advance Documentary Credit (Letter of Credit) Documentary Collection Open Account

Incoterms Incoterms are the Trade terms published

by the International Chamber of Commerce (ICC) that are commonly used in both international and domestic trade contracts.

Incoterms, short for "International Commercial Terms," are used to make international trade easier by helping traders in different countries understand one another.

Incoterms

Incoterms

Advantages of Trade • Promotes efficiency in production as

countries will try to adopt better methods of production

• More employment could be generated as the market for the countries’ goods widens through trade.

Disadvantages of Trade Import of harmful

goods It may exhaust

resources Over Specialization Danger of Starvation One country may gain

at the expensive of another

It may lead to war

Nepal and its international trade history The Federal Democratic Republic of Nepal has traditionally

maintained a non-aligned policy and enjoys friendly relations with neighbouring countries

Nepal’s most substantive international relations are perhaps with international economic institutions, such as the Asian Development Bank, the International Monetary Fund, the World Bank, and the South Asian Association for Regional Cooperation, a multilateral economic development association

In the 1950s, over 90 precent of its foreign trade was conducted with India

Most of Nepal's basic consumer goods were imported from India, and most of its agricultural exports went to India.

Nepal and its international trade history The March 1989 impasse in negotiations for trade and transit

treaties with India seriously damaged Nepal's economy. The transit treaty had allowed goods from third countries

entering at Calcutta to pass through to Nepal and exempted them from customs and transit duties.

The treaty allowed trade to transit at twenty-one border points, and primary commodities were essentially duty-free in both directions

The dispute was not solved until June 1990 when Kathmandu and New Delhi agreed to restore economic relations to the status quo ante of April 1, 1987.

Trade with India decreased from more than 70 percent in 1975 to about 27 percent of total trade in 1989.

Documents to be submitted in the customs while goods are to be imported from India against the payment of convertible foreign exchange:

Declaration Form  LC/ T.T/ Draft  Document of Insurance  Packing List  Bill of Export  Certificate of VAT Registration  Certificate of Registration of firm or company  Certificate of Industry Registration is case of Industry  In case of requirement of permission of certain institution for

importation of particular goods, such permission of the concerned institution 

TA and COP documents for the importation of vehicle  Bi. Bi. Ni. Form 4  Appointment letter of customs agent in case of appointed agent 

Provisions Regarding the Imports from India Procedures to import goods from India L/C T.T Draft  Local Purchase (Local Import) 

The documents to be submitted in the customs while imports are under barter system are

Declaration Form for Import  Declaration Form of already Exported Goods  Invoice  Document of Insurance  Packing List Certificate of Registration of Firm or Company  Certificate of Registration of Industry in case of Industry  Certificate of VAT Registration  Appointment Letter of Agent in case of appointed Agent 

Provisions Regarding the Imports from Tibet the Autonomous Region of China L/C  Draft or convertible foreign currency

payment as specified by Nepal Rastra Bank  Traditional Barter System  Nepalese resident within 30 km distance of

the border are allowed to import the goods up to the amount of NRs.16000 without payments through banking system 

Trade finance done by Nepalese commercial banks Import Business

Letter of Credit Documentary Collection (DAP or DAA) Advance Payment Import Loan Trust Receipt Loan

Trade finance done by Nepalese commercial banks Export Business

Cash against Document (CAD) Documents Collection Service

Export Loan Pre Shipment Loan / Packing Credit Post Shipment Loan / Bills Purchase / Bills

Discounting Bank Guarantee

Thank you!!!!