The South Asia comprises of Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. With the exception of Afghanistan, & these are members of the South Asian Association for Regional Cooperation (SAARC).
In 1997-98, the total trade turnover with these countries touched the level of Rs 6,872 crores against Rs 6,990 crores achieved in the previous year, reflecting a marginal decline of 1.7%.
While India’s exports to these countries stood at Rs 5,898 crores in 1997-98 against Rs 6,122 crores in 1996-97, registering a fall of 3.75% imports from these countries reached Rs 974 crores in 1997-98, as compared to Rs 868 crores in 1996-97, registering a growth of 12.2%. Our trade with these countries amounted to just 2.5% of our global trade.
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During April-October 1998, our total trade with the South Asian neighbours amounted to Rs 4,697.43 crores against Rs 3,448.44 crores in the same period during the previous year, i.e. a growth of 36.2%.
While Indian exports to these countries touched Rs 3,505.33 crores in April-October 1998, as compared to Rs 3,023.76 crores in the same period last year, i.e. an increase of 15.9%, our imports from these countries was to the tune of Rs 1,192.10 crores as compared to Rs 424.49 crores during April-October 1997.
The spectacular increase in import was mainly due to increased imports from Pakistan, Nepal and Afghanistan in the current year.
Afghanistan:
During 1997-98, our exports to Afghanistan amounted to Rs 74.47 crores as compared to Rs 80.73 crores in 1996-97. Import rose from Rs 10.84 crores in 1996-97 to Rs 45.24 crores in 1997-98.
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During the period April-October 1998, exports touched Rs 31.48 crores as compared to Rs 41.21 crores during the same period in the previous year. Imports increased from Rs 8.36 crores during April-October 1997 to Rs 56.30 crores during the corresponding period in 1998-99.
The main items exported to Afghanistan include tire and tubes, tea, drugs and pharmaceuticals and main imports from Afghanistan are fruits and nuts, excluding cashew nuts.
Bangladesh:
Bangladesh is our largest trading partner in the region. During 1997-98, both exports to and imports from Bangladesh declined mainly due to market conditions in the country.
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Our exports came down to Rs 2,839.39 crores in 1997-98, as compared to Rs 3,084.80 crores during the previous year. Similarly, imports during 1997-98 declined to Rs 190.05 crores from 220.91 crores during 1996-97.
During April-October 1998, India’s exports to Bangladesh amounted to Rs 1,902.80 crores as compared to Rs 1,382.31 crores in the same period in the previous year which reflected an increase of 37.7%.
Imports from Bangladesh amounted to Rs 133.96 crores during April- October 1998, as compared to Rs 103.11 crores in the same period in the previous year, registering an increase of 29.9%.
The bilateral trade is carried out within the framework provided by the India-Bangladesh Trade Agreement, with mutually Most Favoured Nation (MFN) treatment accorded to each other.
Major items of export to Bangladesh are textiles, machinery and instruments, transport equipment, rubber products, chemical and pharmaceuticals, minerals and ores, etc.
Major imports from Bangladesh are fertilisers, raw jute and organic chemicals.
Important issues relating to bilateral trade were discussed in the Trade Review Talks held in Dhaka in December, 1998.
Bhutan:
There is a traditional free trade and commerce between India and Bhutan. Commercial transactions are carried out in Indian rupees and Bhutanese Ngultrums. India provides unhindered transit facilities to landlocked Bhutan to facilitate its trade with third countries.
Maldives:
India-Maldives trade is regulated by the bilateral Trade Agreement signed in 1981. Exports from India to Maldives amounted to Rs 28.11 crores in 1997- 98, while imports were only Rs 0.84 crores. Exports touched Rs 16.53 crores during April-October 1998, and imports amounted to Rs 0.05 crores during the same period.
Nepal:
Indo-Nepal relations on trade and other related matters are governed by the bilateral Treaties of Trade and Transit and Agreement for Cooperation to Control Unauthorised Trade.
The Trade of Transit was renewed on 5th January, 1999, for a period of seven years and will hereafter, be automatically extended for further periods of seven years at a time, unless either party gives to the other a written notice, six months in advance, of its intention to terminate the Treaty.
The modalities of transit routes, conditions of transit and customs arrangements as contained in the Protocol and Memorandum to the Treaty will be reviewed and modified every year or earlier if warranted, to meet the changing conditions before the automatic renewal.
Such changes made would be an integral part of the Treaty. The Treaty of Trade is valid upto December 5, 2001 and shall be automatically extended for a further period of five years at a time, unless either contracting party gives a notice for its termination. The Agreement for Cooperation to Control Unauthorised Trade is also valid upto December 5, 2001.
Though under the international conventions, Nepal being a landlocked country, India is obliged to provide only one transit route to facilitate Nepal’s trade with third countries, 15 transit routes have been provided through the Indian Territory and more such routes can be added to the list with mutual agreement.
In addition, facilities have also been provided for Nepalese trade with Bangladesh and Bhutan. On the request of the Government of Nepal, an additional transit route was opened during 1997 through Phulbari- Banglaband, to facilitate trade between Nepal and Bangladesh for the movement of Nepalese cargo, on two days a week under escort.
This was renewed at the Commerce Secretary level in March 1998, and it has been decided to increase the number of days of movement of the transit cargo from two to four days a week and also to waive the requirement of insurance.
An undertaking is given by an Agency nominated by HMGN that they will compensate for any loss to the Government of India in the event of deflection of the goods in transit.
Pakistan:
India’s trade with Pakistan is constrained by the discriminatory policy adopted by Pakistan against imports from India.
While we accord MFN treatment to imports from Pakistan, they allow their private sector to import only out of a list of 594 items from India. Despite bilateral discussions and our diplomatic demarches in this regard, Pakistan is yet to allow its trade with India on a free and MFN basis.
As a part of the composite and integrated dialogue process between India and Pakistan, talks at the Commerce Secretary level were held between the two countries on economic and commercial cooperation in New Delhi on 10th November, 1998.
The two countries exchanged views on various aspects of economic and commercial cooperation. On this issue of granting MFN status to India, Pakistan conveyed that this would be done in due course.
During 1997-98, exports from India amounted to Rs 594.17 crores as compared to Rs 558.12 crores in the previous year. Imports from Pakistan in 1997-98 touched Rs 139.68 crores against Rs 128.36 crores in the previous year.
During April-October 1998, exports declined to Rs 221.58 as compared to Rs 312.82 crores in the same period in the previous year. Pakistan was forced to import sugar in 1997-98, due to a shortage of the commodity in the country.
During April-October 1997, Pakistan imported sugar worth Rs 132.70 crores from India, whereas there is no import in the current year.
Following vastly improved domestic availability, Pakistan has exported sugar worth Rs 435.53 crores to India during April-October 1998, thereby contributing to a total export of Rs 528.77 crores to India during this period as compared to Rs 41.33 crores in the same period last year.
Sri Lanka:
Sri Lanka has traditionally been an important export market for India and is the second largest importer of Indian goods in the region after Bangladesh. The bilateral trade is carried out in accordance with the Trade Agreement signed in 1961. The trade is in free convertible currencies and on a MFN basis.
The trade has grown strongly in recent years, with India enjoying a big trade balance in her favour. Both countries are parties to WTO, SAPTA (SAARC Agreement for Preferential Trading Arrangement) and the Bangkok agreement, within the framework of which, mutual preferential trade concessions are extended to each other.
India and Sri Lanka have signed a Free Trade Agreement on 28th December, 1998, under which tariff a large number of items would be phased out within a time frame. While India would reduce the tariff to zero in three ‘ years, Sri Lanka would do so in eight years.
India will immediately eliminate import duty on around 1000 items when the agreement comes into force upon entering. Tariff on all other products will be reduced, barring those in the negative list of imports and textiles to 25%. Garments will be retained in the negative list.
The items in the negative list number less than 400 and it includes mainly garments, petrochemicals, alcoholic spirits, coconut and coconut oil. Sri Lanka will reduce the import duty of around 900 items to zero immediately, while a 50% cut in tariffs will be affected on around 600 items as soon as the agreement comes into force.
The issues regarding bilateral trade and commercial cooperation were discussed in the 4th Session of the India-Sri Lanka Sub-commission on Trade, Finance and Investment held in New Delhi on 14-15 December, 1998.