Niras asked: It was recently stated that India-Myanmar border trade would be upgraded to normal trade. What is the difference?

Udai Bhanu Singh replies: Trade on the Indo-Myanmar border was traditionally conducted on an informal basis and was quite negligible compared to the normal trade. Trading in traditional goods on head load basis and through barter was the usual practice. A legal basis was accorded to the customary trade when India and Myanmar signed a border trade agreement in 1994. Land Customs Station (LCS) at Moreh was the first trading-point to be operationalised on the Indo-Myanmar border in 1995. The second one is the Zowkhathar-Rhi LCS. A third LCS is expected to be opened up at Avakhung-Pansat/Somrai.

Border trade constitutes only a fraction of the bilateral trade. Enhanced border trade is considered as critical for the development of India’s North-eastern Region (NER). India has a long land border (over 1600 km) with Myanmar, but the border trade remains minimal. In 2010-11, the border trade was only $12.8 million whereas the bilateral trade was $1070 million. Indian exports included cotton yarn, auto parts, soya bean meal and pharmaceuticals while India’s imports included betel nuts, dried ginger, green moong beans, turmeric roots, resin and medicinal herbs. Currently, on the India-Myanmar border, trade at a concessional rate of duty (5 per cent ad valorem) and in certain conditions is permitted for 62 tradable items (effective since December 2012 following DGFT notification) through the LCSs at Moreh (Manipur) and Zowkhathar (Mizoram) as per the Department of Commerce notifications.

The problem lies in the smuggling of items like fertilizers, vehicles especially two wheelers, etc. This illegal transaction on the border gives border trade a bad name while bringing little or no benefit to the communities living on either sides of the border. In addition, the NER is landlocked, and despite its vast natural and human resource, the people of the region cannot have a share in the maritime trade. To the extent the increase in maritime trade does not stimulate the economic growth in the NER (and ignores and even breaks traditional trade links), it perpetuates the perception that the benefits of the ‘Look East Policy’ is bypassing the NER as 98 per cent of the trade is conducted through ports. Thus, promotion of ‘cross border growth poles’ or ‘growth triangles’ is suggested, besides systematic sociological, anthropological and political analyses of the systems in the two countries.

Normal trade is also permitted through the LCSs. The 3rd India-Myanmar Joint Trade Committee (2008) decided that border trade would be upgraded to normal trade, which refers to the trade between two countries that is subject to payment of custom duties applicable on international trade with any other country of the world. According to the Northeast Vision 2020, “opening up trade routes will expand economic opportunities for the region and accelerate its growth process.” There is great potential in the revival of international commerce through road, river (Kaladan) and railways; and, connecting to Chittagong and Kolkata besides Sittwe (to Dawei and beyond in Indochina). It can boost the economy of the north eastern states which could bring back some of the glory of yesteryears when the land-based silk route flourished. Among the 13 Integrated Check Posts (ICPs) being set up in NER, one is at Moreh in Manipur. The objective of ICP is to provide integrated infrastructure (including immigration, customs, and border security with support facilities like warehousing, banking and hotels) and to interdict elements hostile to the country in order to facilitate legitimate trade and commerce.

For more details, refer to the following IDSA publication:

Udai Bhanu Singh and Shruti Pandalai, “Myanmar: The Need for Infrastructure Integration” in Rumel Dahiya and Ashok K. Behuria (eds.), India’s Neighbourhood: Challenges in the Next two Decades, Pentagon Security International, New Delhi, 2012, pp. 110-136.