An important aspect of the ongoing globalisation process has been the increasing integration of national economies. Such a trend stems from the consensus that economies with geographical proximity could generate strong development synergies through effective cooperation in the areas of trade, investment, connectivity and finance. Such cooperation reinforces the efforts of regional countries towards greater integration of their respective economies.
Such consensus of reaping mutual gains by fostering and promoting economic interdependence has also gained grounds in South Asia in recent years.
In view of the fact that South Asia has largely been bypassed by the recent rapid growth of world trade, there is a growing concern that the region may be further marginalised in the process of globalisation unless conscious efforts are made to deepen and broaden the existing economic ties between India, especially its eastern and north eastern regions with its immediate neighbours - Bangladesh, Bhutan, Nepal and Myanmar.
Within South Asia, the vision of economic cooperation is being pursued for long under the ambit of SAARC. But, due to intransigence of one of the member countries, it failed to produce the desired outcome. However, in recent times, for obvious reasons, Bangladesh, Bhutan, India and Nepal (BBIN countries) have taken a separate route for meaningful cooperation to accelerate trade and investment potentials of the sub-region. Despite three rounds of negotiations under South Asian Preferential Trading Agreement (SAPTA), growth of intra-regional trade has been negligible. To stimulate intra-regional investment some initiatives have been taken that include establishment of a SAARC Development Fund as well as SAARC Chamber of Commerce and Industry.
Nonetheless, as of now intra-SAARC investment is negligible excepting Indian investment in some of LDCs of the region like - Bangladesh and Nepal. Till now the South Asian countries have concentrated their efforts in attracting FDI to their respective countries. A comprehensive strategy to enhance and stimulate intra-regional investment has been missing. To a large extent, low intra-regional trade is also a reflection of insignificant flow of intra-regional investment.
Intra-regional trade accounts for only around 5.0 per cent of total global trade of SAARC countries which is well below the level attained by other regional blocks such as - NAFTA, ASEAN and EU where it ranges from 30 to 60 per cent. This has been the trend despite the fact that the eastern sub-region of South Asia consisting of Bangladesh, Bhutan, Nepal, Eastern Indian state of West Bengal and its seven north eastern states and Myanmar have the potential to generate large scale trade and investment for their mutual benefit. Â
This aggregate figure is heavily influenced by low share of India in intra-regional trade. However, Bangladesh, Bhutan, Nepal and Sri Lanka have a high volume of trade within the region, particularly with India. Exports from India to its South Asian neighbours have grown significantly during the last decade. Â Â Â
In view of the above, it is imperative on the part of India that being the bigger economy of the region and the fifth largest economy of the world having superior technology, should come forward with larger investments in their less fortunate immediate neighbours which will be beneficial for all. Â Â
It may not be impertinent here to mention that recently India has opened up its domestic market to LDCs including Bangladesh, Bhutan and Nepal by allowing duty-free and quota-free access of their products. However, the unilateral gesture has hit snags in the form of various non-tariff and para-tariff barriers in India.
This coupled with agreements on road, rail, and river transportation signed between BBIN countries and coastal shipping agreement between Bangladesh and India and also offer of Indian assistance to Bangladesh for improvement of trade facilitation infrastructure of Bangladesh would go a long way in enhancing trade and investment in the South Asian sub-region. Â Â
The writer is Secretary & CEO, India-Bangladesh Chamber of Commerce and Industry.
jbalam44@yahoo.com
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