Resumption of trade through Nathula with China

G. Srinivasan

New Delhi, July 5

With India-China bilateral trade all set to exceed $20 billion in 2006, the reopening of Nathula Pass linking Sikkim with Tibet and neighbouring areas of China marks a new chapter in their booming ties and growing bonhomie. Though the world's two most populous countries have characteristically different political dispensation, they show a remarkable convergence in approach in their policy focused on economic reform to ensure accelerated development.

The reopening of the trade route formally on July 6, in Gangtok, Sikkim through Nathula, which was once described as the silk route, follows the abrupt closing down of border 44 years in the wake of the Sino-India conflict in 1962. The four decades of closure of this vital link disrupted an entire economic system that had brought prosperity to many parts of the Eastern Himalayas, including Sikkim, hill areas of West Bengal, Arunachal Pradesh and also Tibet and neighbouring areas of China.

A host of geo-strategic, politico-security and socio-cultural factors such as the protracted stalemate in the Sino-Indian relations after the 1962 conflict, the bilateral skirmishes over territories and the non-recognition of Sikkim as a constituent State of India by China held up the progress in the resumption of trade through this ancient route.

A major spur for China to open its border for more trade and investment has been the need to bring its own provinces in the periphery (Deng Xiapoing's advocacy of comprehensive

zhoubian zhengce

- periphery policy), mainly the western region, to the national mainstream.

Two projections

The Nathula Study Group, which was commissioned by the Sikkim Government, submitted its report in 2005. It gave a two projections - the higher one showing trade flow through Nathula to grow from Rs 206 crore by 2007, Rs 2,266 crore by 2010 and Rs 12,203 crore by 2015, while lower projections placing the trade flow to be Rs 353 crore in 2010, Rs 450 crore in 2015 and Rs 574 crore in 2020.

Experts reckon that in terms of feasibility this is arguably the shortest route, roughly 590 km between Lhasa, Tibet and Gangtok, Sikkim to reach the ever-burgeoning middle class in the Indian mainland, Bangladesh, Bhutan and Nepal.

Unlike the other border trade pacts, this agreement is likely to have a much larger scope both in terms of the coverage of geographical regions and nature of goods and services. This is presumably because of a relatively easier accessibility to the pass leading to markets and more developed physical and institutional infrastructure in and around the trading points.

Viable land route

Hence it is widely perceived that this first viable land route could attract and divert an increasing portion of the trade carried out through sea route both because of cost effectiveness, short time lead and less cumbersome process.

India's Directorate General of Foreign Trade (DGFT) has already notified 29 items of export to China through the trade route, with China being allowed to export 15 products to India in turn. Once the trade resumption supervenes through Nathula, Tibet and mainland China would act as additional marketing outlets, presaging roaring time for the bilateral trade of India and China.

The reopening of the historic silk route has significant potential for boosting the economies of both North Eastern India and Western China by linking Tibet to Kolkata port. This is likely to set off investment activities in Sikkim and surrounding areas.

The study group said the most crucial 143 km road link between Siliguri- Nathula road via Gangtok town requires very drastic upgradation.

The 1142-km railway line from Golmud city in Qinghai province to Lhasa in Tibet crossing the Gobi has reached a place, which is hardly few kilometres away from the heart of the Lhasa city.

The inaugural of this railway line early this month has linked Nathula trade route with other major business centers in the eastern and south-eastern sea coast of China, known for their colossal commercial activities and also the Special Economic Zones.

All these suggest unmistakably that the border trade between India and China is all set to become a springboard for broader co-operation and engagement with China.

(This article was published in the Business Line print edition dated July 6, 2006)
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