An Overview of Nepal's Import of Strategically Important Commodities (SICs)

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An Overview of Nepal's Import of Strategically Important Commodities (SICs)


In general parlance, the commodities which bring havoc to national security and national supply system in case of a disturbance in the supply of such goods are regarded as Strategically Important Commodities (SICs). The definition of SICs vary from country to country. Population, development, local production and the supply system available are some of the criteria that determine which commodities are strategically important. In ancient times, food, salt and cotton were considered SICs. During the Cold War era, gas, oil, metal, fertilizer and timber were mentioned as SICs in various US government reports. Astonishing development in science and technology has ushered in a paradigm shift in consumption pattern in the modern world and the list of SICs has been adjusted accordingly. In the developed world, rare earth metals and technology are considered as SICs and securing the smooth supply of such commodities has been regarded as a concern of national security. In the context of Nepal, given the landlocked status and poor industrial base, production and storage capacity are determining factors in defining the SICs. Given the above context and the blockade imposed on Nepal by its southern neighbour in the past, dairy products, vegetables and pulses, fruits and nuts, cereals and flours, oil and fat, minerals, minerals fuel, medicine, fertilizer, metal, machinery and parts, vehicles, aircraft, medical and scientific equipment and weapons have been selected here as SICs.

Import Trend of SICs in Nepal
During the last twelve years, Nepal's import of SICs has shown 17 percent average annual growth, reaching Rs 997 Billion in FY 2018/19 which constitutes 70.34 percent of Nepal's total imports. Nepal's import of SICs comprises 77.45 percent of total imports from India whereas Nepal's total import from India in FY 2018/19 was only 64.75 percent of total imports. Nepal government’s revenue from the import of SICs in FY 2018/19 constituted 69.99 percent of total revenue collected from imports that year. These figures indicate that Nepal's position in securing the smooth supply of SICs commodities is very weak and cannot tolerate even a minor shock. Lowering the share of SICs import and increasing the resilience of the country to withstand shocks is the way forward.

Impact of Heavy Dependence on SICs
Heavy dependence on SICs weakens the overall morale of the state and lowers the freedom in formulating appropriate national policies. It also corrodes the bargaining power of the state in international dealing. Nepal's dependence on SICs imports has evidenced Nepal compromising its national interest for the sake of continuous supply of such commodities. The heavy dependence of SICs on foreign countries is corroding the independent decision-making strength of Nepal and eroding her right to exercise absolute sovereignty. As a result, Nepal is still compelled to pursue the ‘Strategy of Survival’ as illustrated by Leo E. Rose in his book.

Due to the uncertainty caused by the growing pressure from oil-producing countries, most of the oil-importing countries have followed the energy sovereignty policy to address the concerns of national security and self-respect. They adopted a two-pronged policy of energy independence, by either enhancing their capacity to produce mineral oil and natural gas or by pursuing alternative energy sources. India and China, the two largest countries in terms of population, have successfully adjusted their 'Agricultural and Land Use' policy to make their counties fully self-reliant on such products. Weapons are another category of SICs where most of the powerful countries are vying for full-fledged independence with heavy investment in Research and Development. ‘Make in India’ policy adopted by India is latest in the series of such endeavours. Now, rare earth metals, semiconductors, integrated circuits, jet engine, supercomputers and seeds have emerged as new products under SICs. International politics is now revolving around these products.

A Way Forward
In 2040 BS, Nepal had formulated a root policy. This policy was a result of Nepal's institutional memory of different regimes and suggestions from Nepal's friends and well-wishers.  

Keeping in view the successful practices adopted by various countries in the world and taking our own experience into account, Nepal must pursue the self-reliance policy on SICs. Given the educational, scientific and industrial background of Nepal, absolute self-reliance policy for all SICs seems impractical in the immediate future. However, SICs should be categorized into various segments and more feasible segments should be selected for execution of self-reliance policy. On this backdrop, Agro-based commodities such as dairy products, vegetables and pulses, fruits and nuts, edible oil and cereal and flours are the most feasible to develop self-reliance. In these, a simple adjustment in the existing policy is sufficient to achieve self-reliance within a short time frame. Likewise, transportation, cooking and heating systems and industrial activities based on mineral fuels should be transformed so that mineral fuels can be substituted by hydroelectricity and other sources of alternative energy such as biogas, wind and solar energy. Similarly, Nepal can be self-reliant in small arms, ammunition and explosives as well. Joint venture manufacturing companies should be established to meet the growing demand for sophisticated weapons. In preliminary stages, manufacturing units of tools, parts and accessories of machinery should be established and investment on innovation should be promoted in these sectors.

The successful implementation of self-reliance policy in commodities listed in the table will help mitigate the illegitimate foreign interference on Nepal's internal affairs. This will also help bring stability, peace and harmony in Nepal as well.

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