Expert Speak Raisina Debates
Published on Jul 18, 2017
Doklam standoff affecting trade through Nathu La As the standoff between Indian and Chinese armies continue in the Doklam area, the trade through the Nathu La pass, located in east Sikkim and lying on  the Old Silk Route, is being getting affected badly. This pass is an important trading route for India with China, being the shortest land pass for trade and the most suitable route for motorised cargo transportation between the countries. It is also one of the three open trading border posts, including Shipkila in Himachal Pradesh and Lipulekh in Uttarakhand. Unless the continuing border tension is defused, it  is likely to adversely affect the progress of trade made over the last decade. It is vital for Beijing and New Delhi to participate in confidence building measures via the Nathu La pass. Economic development is the key to peace and security. Therefore, both countries should liberalise border trade, increasing trading opportunities. The trade through Nathu La is of strategic, economic and sovereign importance to India as well as China. The trade includes Chinese imports like wool, goat skins, sheep skins, yak tails, goats, sheep, yak hair, horses, salt, borax, silk, readymade garments, shoes, quilt/ blankets, carpets, local herbal medicine and export of locally produced commodities like vegetable oil, textiles, copper items, blankets, carpets, tea, and coffee. The export of iron ore and livestock products from India and wool, herbs and electric appliances from China is convenient to transport through this land pass. The trade through the pass was brought to a halt in the run-up to the 1962 Sino-Indian war due to the mounting tensions on the border. For four decades, the route remained shut. The talks to revive trade began in 2003 and were cemented with the signing of a trade agreement between the two countries in 2006 with a review every six months. The Chinese agreed to acknowledge the Changgu region of Sikkim as the trading point for border trade, with Nathu La as the passage. The revival of the Silk Route and the reopening of border trade indicated a positive shift in their bilateral ties as well as in their mutual commitment to strengthen their economies.  The year 2017 marked the 11th edition of the border trade through this pass. During these years, bilateral trade has immensely benefited traders from both countries besides being an important source of income for local residents living along the border. The Nathu La Trade Study Group Report of 2005 estimated significant bilateral trade flow of Rs.2266 crore (US$ 580 million) between 2010 and Rs.12203 crore (US$ 2 billion) 2015.<1>  In 2010, the export from India crossed Rs 4.02 crore while the import from China was zero.<2> The border trade statistics till 2012 show that there has been a significant increase in the export of good to China. The overall border trade in 2012 constituted approximately US$ 200,000 and total exports of US$ 1.125 million. The highest export record to China, ever since the border trade resumed, was in the year 2016 with exported goods worth Rs. 63.38 crore and imported goods worth Rs 19.30 crore.<3> Moreover, it has also helped promote a friendlier relationship. There are, however, a few hurdles, which hinder the smooth flow of trade. The items allowed for trade are limited and trading communities on both sides have been pressing their respective governments to expand the list of the number of tradable items. The items traded in the 1950s and early 1960s are the same as the goods traded today. Thus, many of the permitted tradable items are unnecessary in today’s market. Moreover, the present list is insufficient due to its low commercial value. At present, India allows the export of 29 items and the import of 15 items from China. There is a need to expand the trade in goods to increase the volume of two-way trade through this land route. Bieng one of the leading organic farming states in India, Sikkim can contribute immensely to trade in items like flowers, herbs and crops. The lack of proper infrastructural facilities is another crucial hindrance. The narrow roads, lack of potholes and sporadic dumping of goods makes it difficult to trade efficiently across the border. There are major transportation problems due to the monsoon season between May and September. The roads are frequently in disrepair and landslides block the roads, thereby, making it difficult to commute and transport goods.  The collaboration of State Public Works Department (SPWD) and Border Roads Organization-General Reserve Engineer Force (BRO-GREF) to maintain roads for efficient transportation is restricted due to the overlap between the trade and the tourist seasons. The lack of proper accommodation facilities also becomes a problem for traders who travel from China to Sikkim. Despite the infrastructural limitations, the Nathu La pass remains an important trading route for India with China. And, China expects India to participate in the 21st Century Maritime Silk Road International Expo to be held in September this year. However, if the current crisis remains unresolved, it is possible the advances made in bilateral trade through the pass since 2006 will go in vain, damaging the livelihood of local traders on both sides of the border.  Hence, India and China must diplomatically end the border standoff, which will pave the way for greater economic synergy bringing benefits to both sides.
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