SME Times News Bureau | 24 Sep, 2018
A World Bank report Monday said that
India has potential to triple its trade with its South Asian neighbours to $62
billion against its actual trade of $19 billion.
The report, "A Glass Half
Full: The Promise of Regional Trade in South Asia", estimates
"India's potential trade in goods with South Asia at $62 billion against
its actual trade of $19 billion, which is a mere three per cent of its global
trade and about $43 billion below its potential".
It pointed out that intra-regional trade in South Asia falls short of its
potential because of significant barriers, including tariff, para-tariff
barriers, non-tariff barriers and trust deficit among the countries in the
region.
Trade between India and Pakistan is a mere $2 billion -- which could be $37
billion -- without trade barriers, showed the report launched in partnership
with Cuts International.
According to it, all the countries in the region stand to gain from increasing
trade cooperation.
For India, the deeper regional trade and connectivity could reduce the
isolation of Northeast India, give Indian firms better access to markets of
South and East Asia and allow it to substitute fossil fuels by cleaner
hydro-power from Nepal and Bhutan.
"Given its complicated history, size asymmetries, and a trust deficit,
small steps backed by policy persistence is probably the right way to go for
South Asia," World Bank's Lead Economist and Lead Author of the report
Sanjay Kathuria said.
He said an incremental approach towards deeper trade cooperation could be
powerful. The region has already witnessed this in the form of India-Sri Lanka
air-services liberalisation and India-Bangladesh border haats (markets).
The border haats, an initiative by the governments of Bangladesh and India
aimed at recapturing the once thriving economic and cultural relationships, is
now changing cross-border relations and reducing incentives for smuggling, he
added.
The report also said countries around the world harness the potential of
intra-regional trade to prosper together with their neighbours.
However, while intra-regional trade accounts for 50 per cent of total trade in
East Asia and the Pacific and 22 per cent in sub-Saharan Africa, it forms only
five per cent of South Asia's total trade.