Informal trade in agricultural commodities along the Nepal-India border

Nepal and India share a porous open border of about 1850 km with 27 customs offices. Local citizens from either side are allowed to cross, usually without even having to produce identity papers, purchase items and return home. The economies in the border towns are highly dependent on these consumers—more so in case of Nepalese consumers patronizing Indian markets. Border officers usually allow passage when the perceived values of the goods are up to an acceptable but not precisely defined limit—that is, when convinced that the items are for home use.

However, this informal system was disrupted this year when Nepal’s Ministry of Finance introduced a new provision in its FY 2023-24 budget to charge customs duties on imports of any goods valued above NPR 100 ($0.75); the rule was implemented in an arbitrary fashion by border control officers starting in July.