Growing with thy neighbour

There is no doubt whatsoever that countries trade a lot with their neighbours. It is the most natural thing to do, so they say. A lot of the post World War-II economic success around the world has been based on this model. When it comes to India, its past performances in this regard may have been nothing to write home about, but India's trade with its seven South Asian neighbours has been undergoing a significant shift in the past five years, the most notable development being the rise of Bangladesh as its largest trading partner. According to an analysis by the Department of Commerce, imports into the country from South Asian nations have not shown any substantial increase from 2012-13 to 2016-17, except in 2014-15 when they rose by 19 per cent, but exports from India have been rising steadily for the most part. India has consistently maintained a substantial trade surplus with South Asia over the period.

In the recent past, India has significantly ungraded investment in terms of outreach to the neighbours and beyond to the east of the country. India's lines of credit extended to its immediate neighbourhood have increased from $3 billion in 2014 to close to $15 billion today. India is providing soft loans to its neighbours to develop infrastructure for improved connectivity with India. The soft loans have yielded results. India's trade with our neighbours has increased by almost 50 per cent in the last few years. Today, Bangladesh is India's fifth-largest trading partner and Nepal is emerging as its tenth-largest. India and Myanmar are exploring the possibility of trade in national currencies and establishing direct maritime connectivity. Myanmar is committed to enhancing bilateral ties and wants to expand the G2G trade basket with inclusion of more agro items such as green mung beans. Quite interestingly, the China-India bilateral trade has also witnessed strong growth, the tensions in recent years notwithstanding. An increase in China-India trade in 2021, which reached a record high, surpassing $125 billion speaks volume that New Delhi is unable to reduce its dependence on the Chinese market, a section of the experts feel.

Having said all these, the new line of thinking in the corridors of power is that energy connectivity and trading within the region can prove to be a game changer for India. India has recently come up with the cross-border energy trading policy. Under the new policy, power can be traded between Bangladesh, Nepal, Bhutan and India through corridors in India and Bangladesh. Just to give an example how this new policy has been paying off, the private sector has made significant investments in Nepal due to which the neighbouring country is now exporting power to India.

From 'Look East', we seem to have moved on to 'Act East Policy'. And in line with its 'Act East Policy', India is helping in the overall development of its neighbourhood by investing in infrastructure. The power that we must remember that the growth in trade with neighbouring countries will also ensure a bigger, direct market for the North-Eastern States of India., much to the comfort and advantage of India.