Global Courant 2023-04-14 16:23:01
The potential for cross-border trade between India and its neighbors – Bangladesh, Bhutan, Nepal, Myanmar, Pakistan, Afghanistan and China – has not been fully realised.
India’s formal cross-border trade with these countries passed $2.48 billion in 2021 despite the $115 billion trade potential. Only nine of India’s 17 border states are actively engaged in cross-border trade.
This is due to political and security reasons, difficult geographic terrain for connectivity and growing informal trade resulting from open borders in most of the Northeast region.
Borders with neighboring countries are often not properly fenced and guarded, leading to riots and illegal movement of goods and people. Most of the northeastern region, as well as Jammu and Kashmir, are facing insurgency problems. Insurgents take advantage of porous borders to escape the military, as they are well-connected internationally and have hideouts in neighboring countries.
Another persistent problem is undocumented cross-border migration from Bangladesh to India’s border regions, which results in human trafficking and other crimes. This has led to bilateral tensions between the two countries.
The reality of the Northeast region challenges India’s open economic policies, as conceptualized by the “Act East” policy, which currently fluctuates between the need for economic development in the region and security restrictions.
Despite these challenges, northeastern states have the potential to leverage their strong ethnic and cultural ties with neighboring countries to facilitate the trade of locally produced goods through border hats (local markets along borders) and other channels. These channels can create numerous employment opportunities for young people.
The proposed increase the limit hatred with Bangladesh, the construction of new airports and the new PM-DevINE plan (a regional development initiative) enable the northeastern states to break the vicious circle of dependence on the central government.
Both the central and state governments have introduced many development and infrastructure initiatives, such as Bharatmala – an intra-national transport network to strengthen land route connections with neighboring countries.
India has an infrastructure problem. Photo: AFP/Imtiyaz Khan/Anadolu Agency
But despite these initiatives, the northeastern states still face a lack of infrastructure. Poor road connections and a lack of bridges remain the cause biggest infrastructure challenge in the border areas of the state.
Most villages do not even have access to piped water and electricity, and the border area development program does not have sufficient resources to meet the needs of the border districts. Most border areas lack basic services and employment, causing people to leave.
The central government’s flagship initiatives, Make in India and the Self Reliant India Campaign, are efforts to turning India into a manufacturing center. Given that view, regional integration should be at the top of India’s foreign policy agenda as it would help overcome barriers to the flow of goods, services, capital, people and ideas – all of which are critical to achieving high economic growth.
The central government should increase budget allocations for infrastructure and development initiatives in the border areas to provide the necessary amenities for the local population.
State governments could establish export promotion zones for border trade through integrated checkpoints by providing institutional and financial support to local entrepreneurs. They could also establish a state-level institutional framework to boost local trade, with designated ministries identifying local challenges and strengths.
The role of sub-regional groupings such as the Bay of Bengal Initiative for Multi-Sectoral Technical Economic Cooperation (BIMSTEC) and the Bangladesh, Bhutan, India, Nepal Initiative in facilitating border trade in India cannot be ignored.
These groups help remove trade barriers, harmonize trade policies, develop infrastructure, strengthen cooperation and promote regional integration, which is essential to facilitating cross-border trade.
BIMSTEC is in line with India’s “Act East” policy, which aims to increase regional cooperation in Southeast Asia. At the 2022 summit, Indian Prime Minister Narendra Modi pushed BIMSTEC Leaders to transform the group into a resource for connectivity, prosperity and security – the three drivers of India regional diplomacy.
Modi’s foreign policy calls for looking east. Photo: AFP via Getty/Noah Selam
India considers soft and hard infrastructure connectivity as a top priority of its regional foreign policy. New Delhi recent initiatives such as the Bangladesh, Bhutan, India, Nepal Initiative Motor Vehicles Agreement, the expansion of cross-border rail links with Nepal and Bangladesh, the India-Myanmar-Thailand trilateral highway, efforts to launch direct flights between Indian cities and Southeast Asian tourist destinations and the Security and growth initiatives for everyone in the region are all proof of India’s commitment to this goal.
It is difficult to achieve high GDP growth without a simultaneous growth in trade, especially in the manufacturing industry relies on integrated cross-border value chains.
75 years after independence, India – with its experience in soft power diplomacy to manage international relations – can lead cross-border territorial integration with neighboring countries to promote peace and prosperity in the border states.
Durairaj Kumarasamy is an Associate Professor and Head of the Department of Economics at the Faculty of Behavioral and Social Sciences, Manav Rachna International Institute of Research and Studies.
Manisha Nayyar is an Assistant Professor in the Department of Economics, Faculty of Behavioral and Social Sciences, Manav Rachna International Institute of Research and Studies.
This article was originally published by East Asia Forum and is being republished by Global Courant under a Creative Commons license.
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