Myanmar's bilateral engagement with India in trade has gained momentum since 2008 when political and economic reforms were launched in the former 'pariah' state. India-Myanmar trade has more than doubled in the last seven years and has crossed $2 billion in 2013-14,
Analysis
Myanmar’s bilateral engagement with India in trade has gained momentum since 2008 when political and economic reforms were launched in the former ’pariah’ state. India-Myanmar trade has more than doubled in the last seven years and has crossed $2 billion in 2013-14, but much remains to be done, as India is Myanmar’s distant 11th trade partner.
The 5th India-Myanmar Joint Trade Committee meeting held on 17 February in Myanmar’s capital city aimed at intensifying economic cooperation between the two countries. The meeting was co-chaired by Indian Minister of Commerce and Industry, Nirmala Sitharaman, who announced that bilateral trade will reach $10 billion in next five years and Indian investments in Myanmar would cross $2 billion mark.
In order to achieve this trade target, two routes — maritime and border trade — assume significance. Ever since India launched its Look East Policy, Myanmar’s importance as a strategic and economic partner has been important and trade and connectivity projects were initiated with an objective of achieving regional prosperity.
Border trade
Myanmar is India’s land-bridge to South-East Asia. Sharing a 1,700-km border, the immense potential of border trade potential between was rightly identified by the Look East Policy. However, the only operational border trading post has been the Moreh-Tamu post, off the border in Manipur state in India.
Trade between India and Myanmar through the border trade points of Moreh and Zokhawthar in 2012-13 was only $ 6.5 million. However, the informal trade that takes place across the border is several times higher. Large unregulated informal trade, fraught with security, health and safety risks have remained as challenges to border trade.
Myanmar exports 25 percent and imports 15 percent of its total trade through the border from India. Border trade with India comprises of only 1 percent of Myanmar’s total border trade. India accounts for a sizeable share in Myanmar’s imports of pharmaceutical products (37 percent), essential oil, perfumes, and cosmetics (6.6 percent), rubber and articles (6.2 percent), articles of iron or steel (5.6 percent), cotton (5.6 percent), and iron and steel (5.5 percent).
The Indian commerce and industry minister during her visit to Manipur earlier this year had said that her government is keen on trade and plantation projects in the region as part of the Special Economic Zone in the state. Sitharaman in the bilateral meeting in Nay Pyi Taw underlined the need for improving border trade by offering Myanmar, banking arrangements suited for border trade.
Maritime trade
Trade through sea is another way of intensifying economic cooperation between the two countries. Rightly, discussed in the Joint Trade Committee Meeting was India’s assistance for subsidized direct shipping links to Myanmar. Potential of maritime trade with Myanmar cannot be overlooked since South-East Asian economies- Singapore, Indonesia and Malaysia, have become important trade destinations.
The Kaladan Multimodal Transport Project (KMMTP) that connects Kolkata port with Sittwe port presents such an opportunity. Also important would be the Chennai port for sea links with ports of Yangon and Dawei, the latter is being developed by Thai companies into a Special Economic Zone. Hence, it is no coincidence that the next round of Indo-Myanmar Joint Trade Committee Meeting scheduled to take place in Chennai.
Maritime trade, however bypasses the North-Eastern region of India, and development of this region has been an imperative of the Look East Policy, hence skepticism exists for over-reliance on maritime trade to boost economic cooperation between the two countries. Undoubtedly, maritime trade is high in returns and presents lower security risks compared to border trade.
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