Why in news?
According to official estimates India’s trade with its neighbours has surged in recent years.
What is the status of India’s trade with its neighbours?
- From 2.86 per cent in 2013-14, India’s combined trade with the seven SAARC nations and Myanmar moved up to 3.56 per cent of total trade.
- The share of the neighbourhood in total exports increased from 5.72 per cent in FY14 to 7.75 per cent in FY18, with Bangladesh and Nepal pulling up the averages.
- Bangladesh, Sri Lanka, Nepal put together contributed 13 per cent ($2.2 billion) of India’s total vehicle exports of $17 billion in FY18.
- India-Maldives trade from $110 million to $222 million over the last four years.
- Despite problems of accessibility, India-Afghanistan trade increased by 67 per cent to $1.14 billion. India-Bhutan trade was up 82 per cent to $0.91 billion.
What were the initiatives of India in boosting trade?
- The government’s outreach to its neighbours included initiatives such as Prime Ministerial visits, resolving long pending issues like Land Boundary Agreement with Bangladesh has helped to stabilise trade.
- Opening land visa with Myanmar, implementing decade old connectivity proposals, addressing trade logistics issues and offering soft loans and aid at an unprecedented scale also helped India.
- Though trade was not the only objective of this initiative, it gained prominence in recent years, despite stiff competition from China.
What were the disturbances in trade?
- In FY18 India-Sri Lanka trade witnessed volatility, India’s vehicle exports to Sri Lanka and Nepal were down 17 per cent and 10 per cent respectively.
- While Pakistan is an unwilling trade partner, maintaining bilateral trade at around $2 billion for years.
- Indo-Myanmar trade, which has also been stagnant at around $2 billion for some time, was affected by India’s restrictions on pulses imports last year.
How neighbourhood trade strengthens India’s diplomacy?
- While the political relations between Nepal and India have been rocky, both nations worked at improving trade relations over the last four years.
- India contributed generously to Nepal’s post-earthquake reconstruction ($750 million aid).
- India also made progress in improving trade logistics, invested heavily in cross-country electricity infrastructure that helped mitigate the power shortage in Nepal, lined up investments in oil pipeline, and rail connectivity.
- India-Bangladesh relations are witnessing a steady improvement, with India stepping up its financial assistance programme from $1 billion to nearly $8 billion.
- Project exports will boost bilateral trade in the years to come, helping India recover some of the lost ground from China.
Source: Business Line