Trade and Commerce Treaty of 1950 A.D.


The Trade and Commerce Treaty of 1950 A.D. was signed between Independent India and Rana Regime Nepal in 1950 A.D. on July 31st.

It was also signed between Mohan Shumsher that represented Nepal and C.P.N. Singh that represented India.

The Trade and Commerce Treaty of 1950 A.D. imposed informal Commercial Sanctions on Nepal that limited its possibility for International Trade with other countries.

Provisions of the Trade and Commerce Treaty of 1950 A.D.

Article 1 of Trade and Commerce Treaty

The Indian government recognizes that Nepal has the complete right to trade and transport goods through India and its ports.

Article 2

The Indian government agrees that any goods imported into an Indian port and intended for re-export to Nepal can be sent to Nepal without being unpacked or paying any duty at an Indian port, as long as both governments agree on the arrangements.

Article 3

Nepalese goods in transit through Indian territory, moving from one approved place to another within Nepal, will not be subject to excise or import duties. This is subject to the arrangements agreed upon by both governments.

Article 4

Nepal has the unrestricted right to transport its goods and products for export outside India through Indian territories and ports. The starting place or places in Nepal for this trade must be approved by both governments.

Article 5

Nepal agrees to charge customs duties on imports and exports to countries outside India at rates that are not lower than those in India. They will also impose export duties on goods produced in Nepal and exported to India to ensure fair competition with similar Indian goods.

Article 6

Both India and Nepal agree to help each other by providing essential commodities needed for each other’s economies to the best of their abilities.

Article 7

Both governments will work together to promote trade between the two countries. They will provide reasonable facilities for importing and exporting goods and will make it easier to use cost-effective transportation routes.

Article 8

Civil aircraft from either country will be allowed to fly over the other country’s territory following standard international procedures.

Article 9

This Treaty cancels all previous agreements made between the British Government on behalf of India and the Government of Nepal regarding the matters discussed here.

Article 10 of Trade and Commerce Treaty

The Treaty will become effective three months after both parties sign it. It will be in force for an initial period of 10 years and will continue for another 10 years unless one party gives written notice to terminate it at least one year before the end of the current term.

Analysis of the Treaty

The Trade and Commerce Treaty of 1950 A.D. held significant importance for Nepal, despite being widely regarded as an unequal agreement. Nevertheless, it did bring some benefits to Nepal.

Under this Treaty, Nepal gained the privilege to engage in both imports and exports via Indian ports. The agreement also facilitated and enhanced trade between the two countries, offering provisions for importing and exporting goods.

Consequently, the connectivity between India and Nepal witnessed a considerable boost following the signing of the Treaty. However, there were certain limitations that inflicted significant disadvantages upon Nepal. As a result of this Treaty, Nepal became politically and economically dependent on India.

Furthermore, Nepal’s scope for conducting exports was restricted as well. The implementation of the Treaty has been fraught with multiple issues that have been clarified over time but still persist, causing ongoing problems for Nepal.


The Treaty of Trade and Commerce of 1950 A.D. was conjoined with the Peace and Friendship Treaty of 1950 A.D.

These two treaties together dominated the Political and Economic Condition of Nepal, especially after the End of the Rana Regime.

However, Foreign Policy Experts have argued that the Trade and Commerce Treaty of 1950 A.D. was unequal and damaged the International Capabilities of Nepal.