Published July 11, 2024
Skift Take
Nepal finds itself strategically sandwiched between India and China, balancing economic ties with China’s tourism initiatives while navigating India's regional influence and aviation restrictions.
Peden Doma Bhutia
The Chinese government has declared 2025 as “Visit Nepal Year in China” — an offering that came during a Nepal-China diplomatic consultation meeting in Kathmandu earlier this month.
Boosting tourism from China will help Nepal reach ambitious targets: It wants to attract 2 million foreign tourists annually by 2025, up from 1.1 million last year.
Tourism is a cornerstone of Nepal’s economy, contributing nearly 8% to the GDP. Last year, it generated $2.5 billion in revenue and supported 1.2 million jobs, according to the World Travel and Tourism Council. This sector accounts for over 15% of Nepal’s total employment.
In addition to tourism promotion, China has played a role in developing Nepal’s infrastructure. The Pokhara International Airport, funded by China, is one example. In March 2016, Nepal and China agreed on a loan of CNY 1.37 billion ($190 million), with CNY 356 million ($49 million) as interest-free loans. The Civil Aviation Authority of Nepal is responsible for repaying this by 2036.
The India Angle
However, the airport has also been a point of contention between Nepal and India — its neighbor and largest tourism source market.
A source familiar with the matter told Skift that even after 10 months of opening, the airport hasn’t had any international flights, except for a few chartered Chinese flights, all of which were during the Dragon Boat Festival commemorated in Nepal.
Considering the Chinese investment at Pokhara airport, India has been reluctant to give access to its airspace to passenger planes heading to Pokhara, which would mean longer detours and more expensive flights to Nepal.
No Indian airlines currently serve the Pokhara airport, and the Indian government has not approved Nepal’s Buddha Air’s plans to start flights to Indian cities.
“Tourists often combine visits to India and Nepal, particularly due to the religious significance of both countries,” the source said. “The lack of direct flights between India and China likely contributes to the decline in Chinese tourists to Nepal. Shanghai’s first direct flight to Nepal is scheduled to commence on December 20, with two weekly flights.”
Tourism Industry Reacts
Despite these hurdles, the Nepal tourism industry has welcomed China’s announcement of the “Visit Nepal Year in China.” Bijay Amatya, CEO of Kora Tours, highlighted China’s importance as Nepal’s second-largest tourism market. “We currently have connectivity with Beijing, Chengdu, Guanghua, and Lhasa,” Amatya said.
Flight connectivity between China and Nepal has improved significantly. Subramania Bhatt, CEO of China Trading Desk, reported that 46,671 Chinese tourists visited Nepal in the first five months of this year, with 30 flights per week between the two countries.
Ram Bahadur Ghale, founder of Liberty Holidays, emphasized the strategic importance of China’s gesture, indicating growing recognition of Nepal’s tourism potential and strengthening bilateral relations.
Bhatt added that Chinese tourists can obtain free on-arrival visas at Tribhuvan International Airport in Kathmandu or apply in advance at Nepalese diplomatic missions in major Chinese cities.
However, challenges remain. Ghale said effective implementation of tourism development projects and addressing existing issues are crucial for maximizing benefits. “Infrastructure development and private sector collaboration are key areas needing attention,” he said.
Poor infrastructure, particularly roads, and the need for more flights connecting mainland China to Nepal were highlighted by Amatya. He also stressed the need for Chinese-speaking guides and easier payment options for Chinese tourists.
Bhatt pointed out that Nepal introduced a value-added tax on international aviation services last October. Last month, Chinese airlines threatened to suspend operations if the tax on airline tickets was not canceled, causing concern among Nepalese tourism operators. Safety issues, including natural disasters and political unrest, also pose concerns for Chinese tourists.
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