Friday, August 11 2006 15:42 Hrs (IST) - World Time -

Kathmandu: India will release NRS 1.6 billion (about $215 million) as budgetary assistance to cash-strapped Nepal in the 'next few days', Indian Ambassador to Nepal Shiv Shankar Mukherjee said.

The fund would be released as part of the economic assistance package worth NRS 15 billion that New Delhi pledged in June during Nepal Prime Minister Girija Prasad Koirala's visit to India, his first trip abroad after assuming office.

The package makes India Nepal's biggest bilateral donor so far, surpassing Japan and Britain. According to Nepal's leading economy experts, so far only India has made a firm commitment while the other major donors, in view of the still fragile political situation, have decided to wait and watch before new commitments.

On Tuesday, New Delhi issued a notification granting Nepal exemption from payment of four percent additional duty of customs on specified goods manufactured in Nepal and exported from the country to India.

The exemption was made exclusively for Nepal after an agreement made during Koirala's visit.

This month the Indian Oil Corporation (IOC) is sending a team to Kathmandu to reschedule Nepal's dues to the oil major, which stands at nearly NRS 6 billion.

Later this month, the commerce secretaries of both countries would meet in the Indian capital to discuss bilateral trade and investment issues. The bilateral trade treaty between the two neighbours would also be reviewed.

Mukherjee, who was addressing a meeting of industrialists in the capital Thursday, also said India was ready to encourage its private and public sectors to invest in hydropower projects in Nepal once the country was clear what it wanted.

The envoy also urged the government of Nepal to improve the business environment by addressing questions on investment incentives, a regulatory environment, stability of policy and ensuring that investors' rights were protected.