Smear campaign forced India's exit from Nepal passport deal

India's state-owned Security Printing and Minting Corporation of India Ltd's contract to print four million machine-readable Nepali passports was cancelled in April after Nepal's opposition Maoist party fought it, followed by members of parliament from other parties.

They opposed it on the ground that the deal was struck irregularly, cutting short a regular official process to choose a contractor from several bidders.

India's ambassador to Nepal, Rakesh Sood says that since India accords special privileges to Nepali passport holders, the growing misuse of Nepali passports is a serious security threat for India.

A Nepali passport user doesn't need a visa in India or work permit, can open a bank account anywhere, buy shares, own property and run businesses.

In the last one year, nearly 20 people arrested for terrorist activities in India were found to have crossed into India using the open border with Nepal.

The passport booklets that India was offering would have been difficult to forge, bearing almost as many security characteristics as Indian currency notes.

The Mumbai terror attacks and blast in the Germany Bakery in Pune that had Nepali victims show that India's security threats are also a grave threat to hundreds of thousands of Nepalis who live and work in India. 

Before India offered to print the passports, a French company, Oberthur Technologies, had emerged as the frontrunner with the lowest bid.

When India had to exit from the deal after the Maoists called a general strike and Nepal's Supreme Court ordered a stay, Oberthur became the frontrunner once again as fresh bids were called.

However, now with the new contractor to be decided by Nepal's foreign ministry this week, there are allegations of kickbacks.

Two of the other competitors, Britain's De La Rue and Indonesia's Perum Peruri, Monday filed complaints with the foreign ministry about the French company's offer, saying it does not meet the specifications laid down in the bid documents.

In addition, it now emerges that the Indian company became the victim of a deliberate smear campaign.

A section of Nepal's media alleged that the Indian company was going to use "micro chips" in the passports that would be used to track down the movements of the passport holders and would pose a grave threat to Nepal's national security.

In reality, as per the agreement signed between the governments of India and Nepal in March, the passport deal would have seen the Indian company provide only the blank passport booklets, set up an office in Nepal and train a Nepali staff.

It would then have been the Nepali officials who would have recorded personal data in the passport booklets and India would not have been privy to the confidential information.

Around 2000, when Nepal faced a growing Maoist insurgency and sought to buy weapons from abroad to arm its army, India offered to provide the southern neighbour with its indigenously manufactures Insas family of firearms and helicopters at a 70 percent subsidy.

The agreement was heavily opposed by a section of army officials and politicians as the government-to-government deal meant a goodbye to the hefty commissions they received from earlier arms deals.

The aborted passport deal revives memories of the arms agreement that however was pushed through as Nepal at that time had a strong, elected government.