Economy

INFOCUS|INDIA-CHINA|ECONOMY

Restructuring

the border Tridivesh Singh Maini

C

hina’s high economic growth is based on a number of factors, including the fact that it attaches great importance to its border regions.

The 1982 constitution of People’s Republic of China (PRC) categorically outlines the role of provinces – including its border provinces – in its economic diplomacy. PRC has set up organizations such as the Foreign Af-

fairs Office (FAO) and Foreign Trade and Economic Cooperation (FTEC), specifically for the purpose of dealing with foreign relations at the border.

While the FAO, under the provincial governments as well as the Chinese foreign office in Beijing, deals with logistical issues pertaining to ties with other countries, the FTEC, focuses on specific economic issues. To ensure smooth demarcation of functions, FAO has been entrusted with responsibilities such as reception of foreign dignitaries, foreign visits of local leadership and fairs with sister cities abroad amongst other issues. FTEC confines itself to the nuts and bolts of economic issues, and its main mandate is the promotion of local economic interests.

Among other functions, some of the crucial ones include implementation of national policies, laws and regulations regarding foreign trade, economic cooperation, foreign direct investment, economic zones and trade promotion through trade fairs.

China’s grand vision

The country aims to connect Yunnan with Myanmar via high speed trains. Kunming, the capital of Yunnan has already boomed over the past few years and a trade fair that was held there recently saw businessmen and entrepreneurs from China and other neighboring countries pouring into explore business opportunities. Apart from Yunnan, many other provinces have proven to be significant gateways for neighboring countries.

One prominent example is Xinjiang which is well integrated with Central |46| | 46 46 6| | India-China In nd diaia-C Ch hin h in ina na Chronicle Chro onic nic cle Se Sep September pte pte te b tembe be er 2013 2013 01 0 13 3

INDIA’S EFFORTS SO FAR IN CONNECTING ITS BORDER REGIONS WITH NEIGHBORING COUNTRIES IN SOUTH ASIA ARE MODEST AS COMPARED TO CHINA’S STELLAR PERFORMANCE IN THE SAME SPHERE. APART FROM A FEW STATES SUCH AS TRIPURA WHICH HAVE BEEN SUCCESSFUL IN CULTIVATING ECONOMIC TIES WITH NEIGHBORS IN SOUTH ASIA, THE OTHER BORDER STATES LAG FAR BEHIND.

and South Asia. Connectivity between China’s border province and Pakistan is high on the priority list. Both the countries have recently agreed to expedite the idea of linking Kashgar in Xinjiang to Gwadar in the Sindh province of Pakistan. China is likely to invest in a railway link connecting both the countries too. This is of course in addition to plans related to large scale industrial and infrastructure development projects. There are also talks of setting up an economic zone in Gwadar that will further boost the economy of China’s western regions.

New Delhi’s ties with its border states

India’s efforts so far for connecting its border regions with neighboring countries in South Asia are modest if compared with China’s stellar performance in the same sphere. Apart from a few states which have been successful in cultivating economic ties with neighbors in South Asia, most border states have not made any significant progress.

Tripura has been keen to foster close

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INFOCUS|INDIA-CHINA|ECONOMY

ties with neighboring Bangladesh. In January 2012, Bangladeshi Prime Minister Sheikh Hasina visited the state on the invitation of the Chief Minister Manik Sarkar and was conferred with an honorary doctorate by the Tripura University. The state has shown keenness to supply power to neighboring Bangladesh via the Paltana power plant and the state government has been waiting for over two years for permission from New Delhi for doing so.

Jammu and Kashmir and Punjab have been eager for easing out visa regimes with Pakistan, as well as addressing the issues which hamper bilateral trade.

Punjab has in fact been enthusiastic for beginning power trade with Pakistan.

More recently, Rajasthan and Gujarat have expressed willingness to engage in closer trade ties with Pakistan, specifically in the petroleum sector. Efforts for closer economic collaboration with Myanmar are being sought, which is why we have seen visits by official and non-official delegations, from the North-East and other parts

of India, to Myanmar.

Apart from the keenness of the border states to push for greater trade relations with the neighboring countries, it would be important to mention here, that many important projects such as gas pipelines which include the Turkmenistan-Afghanistan-PakistanIndia (TAPI) pipeline, the proposed Indo-Myanmar-Bangladesh pipeline and even the Iran-Pakistan-India pipeline will pass through border states.

Similarly, power trade with countries in the neighborhood is logistically much simpler through these border states.

Two clear examples which reiterate this point are power trades with Bangladesh and Pakistan respectively which are logistically much simpler through the border states of Tripura and Punjab respectively.

In addition to this, Arunachal Pradesh, Manipur and Mizoram too anticipate direct benefits if trade and connectivity with Myanmar are to open up through these states. Their state governments have been urging the Central

government to liberalize the trade regime with Myanmar and also upgrade the infrastructure on the borders.

Indian Prime Minister Dr Manmohan Singh, during his Myanmar visit, had sent clear signals that he is keen on increasing connectivity between India’s North-East region and Myanmar.

There are a number of road projects, including a trilateral highway connecting India with Myanmar and Thailand which is nearing completion and seeks to connect India to the ASEAN region.

A lot of business lobby groups, such as FICCI, CII, ASSOCHAM and even regional chambers of Commerce like the PHD Chamber of Commerce, North Eastern Chamber of Commerce and the Guwahati Chamber of Commerce have been pro-active in pushing on India for removal of restrictions and upgrading of infrastructure. They have been working with both state and central governments to liberalize trade within the neighborhood. These attempts are at best slow. If the larger picture is to be seen, it is amply clear that

New Delhi has no organized mechanism to ensure a smooth and successful state participation in economic diplomacy with its border regions.

If one were to pinpoint two key reasons for the lack luster role that the border states in India have played in connectivity, and trade and commerce, the first would be the lack of a proper coordination mechanism between Central Ministries and State governments. The approach of the central government is neither organized, nor pro-active. For example, it took over two years for the Tripura leadership to convince New Delhi that selling power to Bangladesh would help New Delhi in generating goodwill in that country.

Secondly, while there is no doubt, that the Central government in India has begun to realize the relevance of border regions, it has failed not only to come up with a mechanism for coordination, but has not even outsourced certain basic aspects of economic diplomacy as has been done in other parts of the world.

Recommendations for India to make economic diplomacy more effective

There is no doubt that there are branch secretariats of the MEA located in cities such as Chennai, Guwahati, Hyderabad, Kolkata and Dharamshala to facilitate economic diplomacy, but they have not been particularly effective because their powers and role are not clearly defined as it is in case of FAO and FITEC, which are well laid out sans ambiguity.

In my view, a number of steps have to be taken to facilitate greater border cooperation for internal development.

Firstly, the powers need to be defined clearly and categorically. Perhaps in the near future, the branches can play a role similar to FAO, and they can actually act as a bridge between the MEA and State government. The MEA can also delegate a certain degree of authority to these branch secretariats on logistical issues. For starters these branch secretariats can handle economic ties with the neighboring countries.

Second, it is imperative that the number of branch secretariats be increased, and they come up at the

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INDIA’S BORDER STATES HAVE PLAYED A LACKLUSTER ROLE IN CONNECTIVITY, TRADE AND COMMERCE WITH ITS NEIGHBORS. THE LACK OF A PROPER COORDINATION MECHANISM BETWEEN THE CENTRAL MINISTRIES AND STATE GOVERNMENTS HAS PUSHED BACK THE ECONOMIC GROWTH OF THE BORDER REGIONS. THE APPROACH OF THE CENTRAL GOVERNMENT IS NEITHER ORGANIZED, NOR PRO-ACTIVE. crucial border states, which are likely to become more important as relations with neighbors grow in the economic realm. Some of the places where they can be set up are: Jammu- Kashmir, Punjab, Rajasthan, Tripura and Manipur. These branch secretariats can work closely not only with State governments, but also with the local chambers of commerce in these states.

Since the MEA and the Ministry of Commerce are laden with numerous priorities, a separate wing can be created in the Ministry of Commerce to specifically look at economic diplomacy with the neighboring countries. This wing can work closely with branch

secretariats, State governments and regional chambers of commerce with powers and authorities akin to FTEC in China.

Fourth, it is important to open international trade centers in border towns such as Amritsar, Jodhpur and Imphal. One of the key reasons why China has been able to expand trade with neighboring countries is the large number of international trade centers, and its ability to organize trade expos and conventions at the border provinces. Though Indo-Pak trade fairs and expos have been organized in Punjab and New Delhi, more such endeavors are needed to further improve bilateral trade. In the context of Myanmar and Bangladesh, such efforts are still needed to be initiated.

If implemented, these solutions will not only give the much needed flip to cross border trade and connectivity, but will also put other potential economic ties, such as power trade on a fast track. Closer ties with the neighboring countries, will benefit not just other countries of the region, but will also assist India’s border states – especially those in the North East – to clock high growth rates. While there is enough focus on border disputes between India and China, perhaps New Delhi could do well to draw lessons from the latter, for a positive outcome.

The author is New Delhi based columnist and foreign policy analyst.

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