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Executive Summary

Then and now

Historically, Nepal’s international trade was confined between India and Tibet primarily due to the nation’s primitive and isolated economy along with political seclusion. Post the 1950s, Nepal adopted more liberal foreign policy practices and established diplomatic relations with other nations and gradually opened up to the world. Furthermore, the economic liberalisation of the 1990s brought market reforms and opened trade regimes resulting more conducive conditions for trade and commerce. Though Nepal opened up to regional and international trade, its landlocked state meant that its immediate neighbours in the south and north were its main trading partners and trade primarily took place through land ports. Thus, border towns not only hold a substantial economic value but also political and social significance. Therefore, it can be said that each border region, and all the towns and cities encompassing them, hold their own significance among various stakeholders.

Border arrangements

People-to-people relation: The open border system between India and Nepal allows free movement of people without any travel documents. The same is not the case at Nepal’s border along China. Only border inhabitants with a valid identity card and a pass can cross over within 30 km of the border point.

Free vehicular movement: A transport agreement signed between Nepal and India in 2004 allows for passenger and vehicular traffic to move freely without a permit or payable tax provided the vehicles return back to their respective countries the same day. In contrast, there is no arrangement of free movement of vehicles between Nepal and China either at the local (border towns’) level or national level.

Accessing cross border markets and facilities: An open border system makes it easier for inhabitants from India and Nepal to access border markets. This allows inhabitants to access and take advantage of the various facilities that are more conveniently available across the border at a much affordable cost compared to other major cities within their home country. The cross-border activities with China, in comparison to those with India, are not as intense and dynamic. This is due to the entry and exit visa requirement for people of both China and Nepal. This severely restricts the movement of people, which hinders the trade and cross border purchasing activities of the people of the border towns.

Understanding border regions

The study focuses on the border towns of Birgunj and Bhadrapur in the south and Rasuwagadhi and Kodari in the north. These border towns were selected primarily because each is different from the other in various aspects which is explored in the study. The border towns have been specifically analysed on the three different