Indian firm seeks $48,000 from Nepal for aborted passport deal

By Sudeshna Sarkar, IANS
Sunday, December 5, 2010

KATHMANDU - India’s state-owned currency printing firm, the Security Printing and Minting Corporation of India, has asked the Nepalese government to reimburse the $48,000 the company incurred after Kathmandu signed a major passport contract with it but then cancelled it unilaterally because of political pressure.

The New Delhi-based company is seeking from Nepal’s cash-strapped caretaker government the money it says it spent on hosting a Nepali delegation in New Delhi and buying from the international market the items necessary to print almost 3 million modern Nepali passports.

The Indian embassy in Kathmandu confirmed that the Corporation had taken up the issue of reimbursement with Nepal’s foreign ministry after Nepal cancelled the deal in April and handed over the contract to a French company following a second round of international bidding.

The passport controversy started in January after Nepal cancelled a bidding process started six years ago for printing 3 million Nepali passports that have to be machine-readable in keeping with international aviation norms.

The Indian company was given the contract after a request by India’s External Affairs Minister S. M. Krishna who pointed out India’s serious security concerns about Nepali passports. Thanks to a 1950 treaty, India and Nepal treat each other’s citizens as their own. Nepali passport holders therefore do not need a visa to stay in India and can open bank accounts, buy properties and take up any jobs in the neighbouring country.

Growing reports of Nepali passport thefts and rising incidences of terror groups targeting Indian cities via Nepal made India suggest the move so that it could incorporate special security features in the passports making them difficult to tamper with or counterfeit.

However, Nepal’s coalition government cancelled the contract after pressure from its own allies as well as the opposition Maoist party, who also threatened the state with strikes.

While the deal was on, the Indian company had taken a delegation from Nepal, headed by the chief of protocol at the foreign ministry, and other government officials on a study tour in India to inspect its facilities.

However, it is unlikely that the Corporation will be able to reclaim its expenses soon. Though it approached Nepal almost two months ago, it is yet to hear from the government.

With the caretaker government of Nepal being unable to exercise any authority and regularly gripped by financial crises, it is not in a position to repay the claimed sum.

The Indian government is said to have taken up the cause of the Corporation, an indication of New Delhi’s annoyance at the passport debacle that it regards as a slap on the face.

Despite being ready to waive Nepal’s debts in order to help the economically weaker neighbour, New Delhi took a hard stand in the recent past after Nepal began buying arms and aircraft from China.

The Indian government was irked as Nepal made immediate cash payments for the Chinese purchase but was dragging its feet on paying the money it owed India for supplying arms and other military equipment even though they were given at a 70 percent subsidy.

(Sudeshna Sarkar can be contacted at

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