Trade Diplomacy of India

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