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Political unrest in Nepal, marked by violent strikes and protests, has brought its economy to a halt, with Indian firms getting uncertain about doing business in the neighbouring country.
With Prime Minister Pushpa Kamal Dahal 'Prachanda' resigning over the issue of sacking of the army chief Gen Rookmangud Katawal, the land-locked country plunged into street protests and strikes affecting business.
"Industries are badly hit by acute shortage of power and raw material, petrol and diesel....labour unrest has struck at the very heart of businesses," Federation of Indian Chambers of Commerce and Industry said after receiving feedback from the Nepalese business chambers.
Strike in the Tarai region, the lifeline of Nepal, has hampered businesses heavily.
"Foreign investments have nearly dried and no new joint ventures are being worked," Ficci said quoting an official of the Federation of Nepalese Chambers of Commerce and Industry.
The Maoist trade unions have threatened officials of an Indian FMCG company, which had established a significant presence in Nepal since 1989, Ficci said, adding the company officials have been issued threats to pull out of the neighbouring country.
Production loss would further dis-balance the trade gap between India and Nepal. India's exports to Nepal in the first six months of the last fiscal stood at $867 million, while imports were $275 million.