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Dy. CM Shri Jishnu Debbarman Speaks at Webinar on Doing business with Neighbours Post Covid-19 Outlook and Strategy

Tripurainfo

May 27, 2020, 13:45:37   

26 May 2020: 1100-1400 hrs: CII Online Virtual Platform

The development of India's north-eastern region (NER) has long been a major challenge to policymakers both at the state and the centre. Neither the State-led development model followed till 1990 nor the market-led development initiative followed since 1991 could bring any respite for this landlocked region. The peripheral geographical location of the region stood in the way of her progress. Under the leadership of our Prime Minister these challenges are today being practically looked at and there is a changed view of the NER that reflects the vision of Sri Modi ji which clearly states that the NER must become the dynamo of growth for India.

Like countries across the world, India has also started promoting cross-border trade and economic cooperation. This change in the perspective has immense implications for the development of the NER as it shares 98 per cent of its international borders with the neighbouring countries and is connected with the mainland only through a narrow strip of land popularly called 'Chicken's Neck'.

The big question is Can Cross-border Trade and Development of India's North East Could trade with neighbouring countries trigger development in the NER? To find out, one just has to look at the basic characteristics of trade in the NER. In fact more than 90 per cent of NER's trade flows to Bangladesh while her formal trade with Bhutan and Myanmar is abysmally low.

The reason for the overwhelming predominance of NER's trade with Bangladesh lies in their complementary structure of resources between the two regions. While the hills of NER are rich in minerals like coal and limestone; horticultural products such as vegetables, ginger and turmeric; forest products such as honey, broom grass, betel nuts and so on, the plains of Bangladesh lack them. As a result, there exists a strong basis for trade between them.

NER,s natural resources are swapped for Bangladeshi manufacturing goods. As an example: While limestone is being exported across the border of Meghalaya to cement factories in from Bangladesh, manufactured cement is being imported through different land ports in Tripura. In the same manner, various fruits and vegetables are being exported to Bangladesh. Processed food products from these raw materials are being imported in NER. Thus, NER is not adding any value before the exports her resources to Bangladesh; rather, business and industry in Bangladesh benefit through value addition. This is because of cheaper labor and better infrastructural facilities there compared to NER. India's Bhutan Trade: Implications for the Northeastern Region The competitive resource structure between the NER on the one hand and Bhutan and Myanmar on the other does not provide any firm basis for trade. Whatever trade flows through the land ports of NER to these two countries is essentially transit trade which is not produced in NER but in other states of India. Manufactured goods produced outside the region are exported through the NER. In spite of the fact that Bhutan enjoys a free trade status vis-à-vis India and her external trade is essentially India centric as, in 2017, 77.57 per cent of her total exports went to India and 80.54 per cent of her total imports came from India (Royal Government of Bhutan [RGB] 2017), NER's trade with Bhutan was negligible. The primary reason for this lies in the fact that while the resource structures between other Indian states and Bhutan are complementary in nature, the same between Bhutan and NER are competitive.

Moreover, much of Bhutan's trade to India flows through the Phuentsholing– Jaigaon border point as it lies on the commercial lifeline. Thus, West Bengal acts as landlocked Bhutan's gateway to other South Asian countries. Besides the issue of being cost effective for Bhutan to trade with mainland India, Bangladesh and Nepal using the road networks in North Bengal (the northern region of West Bengal), road networks of NER are usually avoided. The NER is contiguous to the underdeveloped eastern region of Bhutan, there is hardly any scope for using cross-border trade as on either side. India's Myanmar Trade: Implications for the North-eastern Region Myanmar, India's gateway to Southeast Asia, has a population of about 54 million (2018) and an economy of US$67.40 billion (2016). Myanmar, the storehouse of natural resources, presents huge potential for growth, development, trade and commerce, which had not been hitherto realized due to an incongruent political regime. About five decades of isolation (1962–2011) coupled with sanctions by the West did not allow the economy of Myanmar to integrate with the global economy and hence the country’s foreign trade is largely limited in terms of trade with the neighbouring countries in Asia.

 In 2016, Myanmar drew about 34.42 per cent of her total imports from China, while for India was only 6.97 per cent, making the Chinese market 4.94 times attractive compared to India. What is noteworthy is that Thailand has made substantial inroads in Myanmar from which the Thai economy is being immensely benefited.

 NER and Myanmar have competitive resource bases and hence there is hardly any strong basis for trade between them. As a result, unlike trade between NER and Bangladesh, which is quite robust and growth generating as the resource bases between them are complementary. The challenge before NER and Myanmar trade lies in transforming it from transit to growth-generating trade through linkages between trade and local resource bases.- Thailand Trilateral Highway One such sub-regional cooperation initiative having tremendous development implications for the NER is the India–Myanmar– Thailand (IMT) Trilateral Highway.

This trilateral cooperation will not only transform NER from a landlocked area to land-linked area, but the Continental Route will provide the much needed logistical space for which the region could not reap the benefits of India's Look East Policy. How can IMT cooperation set the ball rolling for NER? To cite examples of two cases:

Pineapples

Pineapples and ginger that grow in plenty in the hills and the plains of NER. India produces 6.34 per cent of the global production of pineapples; she only shares 0.06 per cent of global exports (FAO 2013). Within India, NER contributes to 48.33 per cent of the total national production. Thailand produces 8.92 per cent of global production but shares 13.37 per cent of global exports. As Thailand is one of the leading food processors and world’s largest exporter of pineapple juice (17.92% in global share), pineapples produced in NER if exported to Thailand will be beneficial for both as it has been facing severe crises of pineapples for almost three quarters in a year (Q1, Q2 and Q4). Thus, supplying pineapples to Thailand via the IMT highway will be a win-win situation for both the countries.

This resource (in NER)-industry (in Thailand) linkage will ensure remunerative prices for the farmers as well as profit margins for the intermediaries, leading to a rise in the level of their income. A Study of 2017 shows that traders might reap about 90 per cent of returns on their investment even after paying nearly double the farm gate price.

 

Ginger

As Thailand is one of the net importers of ginger and offers much higher prices compared to Bangladesh, it will be beneficial for both ginger cultivators in NER and ginger merchants in Thailand to trade. Thailand will have access to raw materials and NER will have access to a lucrative market. The technology, processing efficiency and market penetration skills of Thai firms while combined with raw materials available in the NER will create a win-win situation for stakeholders in both countries. As Japan and Singapore are also net importers of ginger, the ginger traders in Thailand due to their close networks in those countries might reap additional benefits by importing the surplus available in NER.

 

Transit Route Through Bangladesh

Like the IMT Trilateral Highway, NER will immensely benefit if she is allowed to access mainland India through the neighboring Bangladesh. As elaborated elsewhere once a transit corridor through Bangladesh is used, the distance between Agartala and Kolkata is reduced by 73 per cent. The people of the state of Tripura will not only enjoy lesser transportation cost due to the shortening of distance but will also save about 80 per cent in travel time. From Bangladesh’s point of view, as the territory of Bangladesh lies between the NER and mainland India, they can make commercial use of their unique location by providing transit services to India. This will also be beneficial for Bangladesh by way of transit fees from international exports through the Port of Chittagong .

Smart Management of Borders

Both geo-economics interests for promoting cross-border trade and development cooperation and geopolitical concerns for the management of Indian borders could be served by way of adopting the ‘smart border’ approach as it is being done in the US-Canada borders as well as the intra-EU national borders (European Commission [EC] 2014) through the establishment of an effective entry/exit system. The establishment of cross-border connectivity through sub-regional cooperation with neighboring countries, strengthening of cross-border sub-regional value chains and encouraging cross-border market integration appears to be the appropriate development strategies for the NER. Under the dynamic leadership of our prime minister Shri Narendra Modi ji, the Act East policy will surely encompass all these concerns of accelerating trade with neighboring countries to take NER on the road greater development. It is his visionary statesmanship that has transformed the Look East Policy to Act East Policy the emphasis is now on correct and concrete action rather than just looking East.

   (Tripurainfo)

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