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India’s Act East Policy can really benefit the ASEAN trade network through NE India

24 Aug,2022 07:32 PM, by: Pooja Dasgupta
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There is an urgency to restore and scale economic growth after several nations witnessed a massive economic slowdown, including India during the Covid pandemic. In Northeast India, the path to move ahead in economic growth is through the ASEAN network.


Collectively, the ASEAN nations size up to be the third largest economy in Asia and the fifth largest in the world after the US, China, Japan & Germany, with a total combined GDP worth more than US $3 trillion and representing a combined population of over 660 million people. And what’s more promising is that ASEAN is anticipated to become the fourth largest economy in the world by 2030.


Northeast India’s role in India - ASEAN Trade Ecosystem

 Much of India’s trade with ASEAN used to be between Singapore, Malaysia, and Thailand.

However, Northeast India’s strategic geo-position and healthy bilateral relations with several ASEAN nations including Bangladesh, Cambodia, Laos, Bhutan, etc. offer further scope for economic expansion in our region through advancing trade mobilisation and accelerating the import-export exchange within the ASEAN network through NE India.

The Trilateral Highway Project

In this light, the trilateral highway connecting India, Myanmar, and Thailand has witnessed a push for expansion as part of India’s Act East Policy, which will extend the route to Cambodia, Laos, and Vietnam which can increase the route from an existing 1400 km to 3200 km. The interest shown by India in extending the Trilateral Highway route stems from strategic anticipation to generate an estimated US $70 billion in incremental GDP and 20 million in incremental aggregate employment by the year 2025. The border town of Moreh located in the Northeastern state of Manipur connects India to the Trilateral Highway - and this further amplifies the importance of Northeast India’s role in strengthening the India-ASEAN ties.

The Kaladan Multi-Modal Transit Transport Project

The Kaladan Multi-Modal Transit Transport Project (KMMTTP) is another excellent initiative in the direction of accentuating trade relations with the ASEAN networks through enhanced water transport routes, and Mizoram plays a key role in enabling the ambitious project successfully. The arrangement will not only boost bilateral trade volumes but will also relieve the burden from the congested narrow Siliguri corridor by providing alternate trade route (via sea) from mainland India. 


(Read more about the KMMTTP project here)

The Bangladesh, Bhutan, India & Nepal (BBIN) Motor Vehicle Agreement

The Bangladesh, Bhutan, India, and Nepal (BBIN) motor vehicle agreement was signed in June 2015 at the BBIN transport ministers meeting in Thimpu, Bhutan. Under the agreement, member states can ply their vehicles in each other’s territory for transportation of cargo and passengers, including third country transport and personal vehicles which would be electronically tracked and permits will be issued online.


The motor agreement has proven to be highly beneficial in cutting down transport time and easing down on time-consuming custom clearance mandates at the border during its initial trial runs. However, in 2016 Bhutan’s upper House rejected the BBIN MVA citing environmental concerns. It was seen as a major setback to India’s diplomatic agenda as PM Modi was the one to pitch the pact at the 2014 SAARC Summit in Kathmandu.


India already holds a bilateral motor vehicular pact with Bangladesh and Nepal - However, the BBIN MVA implementation would have enforced a multilateral agreement that could have magnified trade avenues between the four nations. The latest BBIN MVA meeting was held in March 2022 where the Bhutan delegation participated as an observer. The meetings finalised an MoU to be signed by India, Bangladesh, and Nepal for implementation of the BBIN MVA by the three nations, pending ratification of the MVA by Bhutan.


Assam’s role ASEAN trade relations with India

Assam has immense untapped potential with regard to bilateral trade associations with international markets. And ASEAN nations offer the perfect scope for Assam’s entrepreneurs to look up to. One of the promising areas of economic growth is organic agricultural produce represented by a 17 lacs strong farmers’ network in the state.


The demand for organic products worldwide, including in ASEAN nations, creates a viable export market for Assam’s organic produce. In this case, the Farmers Producer company (FPC) can be a role model to push the farmer's products into international markets.

Additionally, Assam’s handicraft and textile commodities can greatly contribute to the region’s export value chain as well.


All the above-mentioned projects are highly favourable for seamless mobilisation of trade between NE India and ASEAN nations. And therefore, strategic investments and funding by financial institutions and key stakeholders are extremely important and need of the hour, so that these projects are successfully in motion and paves way for accelerated trade connectivity.


We need a comprehensive consortium to promote the products of both farms and handicrafts. At the same time, local entrepreneurs & businesses catering to these areas of trade should push forward innovative solutions for establishing a consistent export network by strengthening logistical infrastructure backed by technological advancements.




Disclaimer: The opinions expressed in this article are those of the author's. They do not purport to reflect the opinions or views of The Critical Script or its editor.

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