Urgent coordination required to improve road connectivity, boost trade : Nepal

Government eyeing greater association with BIMSTEC nations as SAARC stagnates

India should expediently coordinate with Nepal to improve road connectivity and bolster bilateral trade, Commerce minister of Nepal, Romi Gauchan Thakali said. Speaking at the Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation (BIMSTEC) business summit organised by the Confederation of Indian Industry, Thakali said Nepal has submitted a list of four additional transit points to increase land border trade with India.

India's bilateral trade with Nepal stood at $ 4.4 billion in financial year (FY) 2015-16, a drop of over 15 per cent over the previous FY. Most of this goes through the border at Raxaul.

Greater trade with neighboring Nepal as well as the entire BIMSTEC region could be achieved through utilising the shared resource of the Bay of Bengal and revitalising centuries old maritime trade links, Commerce and Industry Minister Nirmala Sitharaman said at the event.

BIMSTEC, which comprises seven nations lying in the adjacent areas of the Bay of Bengal — India, Bangladesh, Bhutan, Nepal, Myanmar, Sri Lanka and Thailand — is set to become a focus area for India as the Saarc (South Asian Association for Regional Cooperation) grouping looks increasingly unstable with major nations India and Pakistan at loggerheads over terrorism and other issues.

With escalation of hostilities between India and Pakistan, the government is looking to step up trade, investment talks with BIMSTEC, which has all the members of Saarc apart from Pakistan and Afghanistan, a Commerce Ministry official said under conditions of anonymity.

While a framework agreement to establish a Free Trade Area (FTA) was signed by BIMSTEC nations back in 2004, it is yet to be operationalised. This is because of persistent differences over merchandise and services trade even after 20 rounds of negotiation having taken place over the past 20 years.

While negotiations currently take place on the basis of reducing the negative list of commodities between nations, countries have increasingly felt the need to move towards a system which tries to remove barriers, experts said.

Nepal is also looking for affirmative action on the 'action list' of commodities, commodities on which trade is allowed, Thakali said. Almost 23 per cent of all commodities traded in the bloc currently fall within the negative list.

However, an agreement on goods trade is nearly finished, Sumith Nakandala, the BIMSTEC Secretary General told Business Standard. He added that the BIMSTEC summit in Goa set to be held on the sidelines of the BRICS (Brazil, Russia, India, China, South Africa) summit during 15-16 October, is expected to set the tone for early conclusion of the FTA.

Intra-regional trade within BIMSTEC currently stands at only 2.8 per cent as compared to total trade conducted by the nations. The region is home to around 1.5 billion people which constitute around 22 per cent of the global population with a combined gross domestic product of $ 2.7 trillion.

Commenting on the recent cancellation of the Saarc summit, Thakali said 'it very unfortunate'. Nepal, which chairs the grouping, however believe India and Pakistan should resolve their differences through diplomatic efforts.