PM Modi to focus on greater connectivity, trade during BIMSTEC summit

Leaders of the seven nation grouping will meet in Kathmandu for a two-day summit beginning August 30

Greater regional connectivity among nations part of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (Bimstec) grouping as well as an upgradation of trade ties will be on Prime Minister Narendra Modi's agenda later this week during the Bimstec summit in Kathmandu.

During August 30 and 31, Modi will be visiting Nepal and pushing for seamless connectivity through Bangladesh and Thailand for goods trade. India is revising its economic diplomacy with Bimstec nations at a time China continues to consolidate its position as a major regional power in the area.

Over the past few years, New Delhi has refocused its attention on Bangladesh, Bhutan, Nepal, Myanmar, Sri Lanka and Thailand - nations lying in the adjacent areas of the Bay of Bengal. "The potential for greater trade through seamless land and marine connectivity is expected to have significant economic benefits for the lesser developed states along India's eastern border," a senior Foreign Ministry official said.

This will be based on the master plan being drawn up by the Asian Development Bank, that is almost ready, he added. Significant breakthroughs may occur on the BIMSTEC Coastal Shipping Agreement and BIMSTEC Motor Vehicle Agreement, that are currently being negotiated.

The most successful connectivity project so far involves the sub-group of Bangladesh, Bhutan, India and Nepal who signed a Motor Vehicles Agreement in 2015. It enables vehicles to enter any of the four nations without the need for trans-shipment of goods from one country's truck to another's at the border. Trial runs of trucks between Bangladesh and India have also begun.

However, other major projects such as the Kaladan Multimodal project which seeks to link India and Myanmar, or the Asian Trilateral Highway connecting India and Thailand, are yet to be finished.

Trade pact uncertain

On the other hand, the idea of a proposed free trade agreement (FTA) among member nations - that had received support from earlier Commerce and Industry minister Nirmala Sitharaman - has now been placed on the back burner. Diplomatic sources revealed that the External Ministry is strongly against pursuing the deal since domestic industry has repeatedly voiced concerns on the existing FTAs. This will be a major departure from India's earlier stance.

But persistent differences over tariff rates and sectors covered under merchandise trade had been difficult to break through even after 20 rounds of negotiation having taken place over the past 20 years. A framework agreement to establish a free trade area was signed in 2004 but it is yet to be operationalized. Talks on services trade are set to resume. However, an agreement on mutual assistance on customs matters has been signed and is under ratification currently.

The BIMSTEC region brings together 1.5 billion people or 21 per cent of the world population and accounts for almost 3.7% of global trade and a combined gross domestic product (GDP) of over $2.5 trillion. However, the grouping has not progressed much in terms of economic cooperation or physical connectivity since 1997.

Since then, only four summits have been. Leaders from the nations last came together during a mini summit at Goa on the sidelines of BRICS Summit in October 2016. In his fourth bilateral visit to Nepal, Modi will also be holding separate discussions with the Nepalese government.