India has agreed to review the Nepal-India trade treaty after nearly 17 years without substantive amendments.

The agreement was reached during the Nepal-India Intergovernmental Sub-Committee (IGSC) meeting on trade, transit and cooperation to control unauthorized trade, held in New Delhi on September 16–17, 2026.

According to Buddha Bahadur Gurung, Joint Secretary at Nepal’s Ministry of Industry, Commerce and Supplies, both sides agreed to form a bilateral technical committee within six months. The committee will examine the treaty and recommend areas that require amendment, after which the formal review process will move forward.

Nepal has identified non-tariff barriers, high trade costs, trade facilitation, services trade and digitalization as key areas for review. Nepal also raised export-related concerns, including barriers affecting jute and steel products. Indian officials indicated that trade-remedy measures would be handled under existing laws and through the relevant investigation process.

The treaty provides duty-free and quota-free access to the Indian market for Nepali goods that meet the specified rules of origin, although quantitative restrictions apply to products including vegetable ghee, acrylic yarn, copper products and zinc oxide.

The agreement has a provision for review every seven years. However, it was automatically renewed in 2016 and again in 2023 without substantive changes. Under the existing arrangement, it is automatically renewed for another seven years unless either side gives three months' notice of its intention to terminate it.

Trade experts have argued that the review is important as Nepal faces persistent trade barriers and a widening trade deficit with India. Non-tariff requirements, sanitary and phytosanitary standards, technical barriers and procedural paperwork have been cited as challenges for Nepali exporters.

Nepal is also seeking greater attention to trade in services and digital trade processes, which are not adequately covered under the existing goods-focused framework. Officials say digitization could help reduce paperwork and trade costs.

Agricultural trade is another major issue. Experts say cheaper Indian agricultural products have put pressure on Nepali farmers and producers, while Nepal's export performance has remained heavily dependent on a limited number of products, including refined soybean, palm and sunflower oils.

The technical committee's recommendations will determine which provisions are taken forward for formal amendment as the two countries begin the long-delayed treaty review.