Arvind Agarwal’s (name changed) mid-scale food processing business in Nepal suffered a major loss during the five-month-long anti-constitution agitation, which saw a blockade of the main trade route through Birgunj by Madhesis.

Three months down the line, Agarwal, a Nepalese citizen, is now facing regular threats of raids and extortion from Nepal’s corrupt government agencies.

Unwanted in his own land, he stopped expanding the business. “I called off a plan to set up a new unit with Indian collaboration,” he told BusinessLine .

He is not alone. At least three prominent Indian-origin businessmen of Nepal allege serious persecution of the community, which controls a majority of Nepal’s manufacturing sector and a significant portion of trade and finance, by the hill community dominated ruling class. The persecution has taken place over the last three months, ever since the KP Oli government upped the ante against India.

Location factor

They are at fault because Nepal’s industry is located in the Madhesi heartland of Birgunj and Biratnagar, contributing in excess of 70 per cent of Nepal’s revenue budget.

“The social divide became clear from 2007-08, when Madhesis (Indian-origin people from Bihar and UP) raised a strong movement demanding equal rights,” a businessman said. “The persecution is now reaching unmanageable proportions,” he added.

According to him raids by tax authorities or the anti-money laundering agency and others have become commonplace in Nepal, and the majority of the raids, including a mass raid late last week, “target” Indian-origin businessmen.

In most cases, such raids end up in extortion. Pashupati Murarka, President of the apex industry body Federation of Nepalese Chambers of Commerce and Industry, however, denied any knowledge of such incidents. “We are not aware of any such incident or trend,” he said.

Clear impact

Gagan Thapa, a Nepali Congress MP from Kathmandu and a prominent opposition leader, said the FNCCI has raised concerns on raids on businesses to the finance minister but, there was no specific reference to Indian-origin businesses.

He, however, confirmed that the Oli government’s failure to resolve the constitutional crisis with Madhesis had created unrest leading to a complete halt on fresh investments by the private sector. “Investors are calling off their investment plans in Nepal,” he said.

Chandra Kishore a Birgunj based columnist, however, feels that Thapa is constrained by his party’s political obligations as taking a stance in favour of Indian-origin people might cost the Nepali Congress its hill constituencies. According to him, businesses in Birgunj raised such concerns at a recent meeting with Thapa.

“Nepal’s politics are now polarised on anti-India and pro-China lines and it is too risky to express our views openly,” a businessman said.

Flight of capital

Sources say Nepali businessmen are now looking at opportunities to park their wealth outside the country.

Nepal’s laws stipulate that its businesses cannot invest outside the country. However, over the last decade, top Indian-origin businessmen were found investing across the world, including in India, through off-shore destinations such as Dubai.

Sources say the trend has now caught up with smaller businesses. “Capital is flying out for safety and there cannot be much legality in it,” said a business source. However, sources in Delhi could not confirm any such trend.