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    South Asia
     Aug 29, 2006
The India-China road to - somewhere
By Shehla Raza Hasan

KOLKATA - Dignitaries from China and India braved freezing rain to mark the official opening of the Nathu La Pass this summer, an event considered a landmark in the gradual rapprochement of the two countries.

The pass, which crosses the Himalayan Mountains at more than 4,000 meters from the Indian state of Sikkim into Tibet, had been



closed since 1962, when India and China fought a brief frontier war.

But its opening may have more immediate symbolic than practical value. Although there are optimists who think two-way trade over this land bridge may eventually grow to be worth millions of US dollars, the results so far have been disappointing. Businessmen from eastern India are left looking for alternative and better routes for trade.

Last year, the Nathu La Trade Study Group, commissioned by the Sikkim government, predicted a US$4.57 million trade flow by 2007, $78 million by 2010 and $127.5 million by 2020.

Almost two months after the opening, reports show that Chinese exports are pegged at about $12,500 per week and Indian exports slightly higher than that. However, it is probably premature to judge success by these figures at such an early date.

Truckers on the Siliguri-Nathu La route alone, said the report, could expect to earn annual revenues as high as $3.1 million at present freight rates, even if the traffic volume were as low as 100 trucks a day.

Industry bodies cite several reasons behind the poor initial showing:

Lack of infrastructure: Poor roads and communications, lack of banking facilities and lack of container depots need to be addressed before the envisaged brisk trade can take off.

Need to expand basket of permitted items: The list of 29 items from the Indian side and the 15 items from the Chinese side permitted do not cover a substantial high-return-high-value range of goods and services. Industry bodies feel that these lists have to be expanded, and such items as livestock should be dropped.

Limited seasons: Trade through Nathu La can only be done for a limited period during the year when good weather conditions permit. This is the chief reason the pass can never develop into a major land route between India and China.

Speaking to Asia Times Online, Nazeeb Arif, secretary general of Indian Chamber of Commerce, the largest chamber in eastern and northeastern India, said: "Owing to all these handicaps, there is a strong need to tap alternative land and sea routes for Indo-China trade. The Nathu La Pass can at best be an important trading post for the local market and the Tibetan autonomous region and not for India and China as a whole."

He pointed out that the location of the pass is not ideally conducive to India-China trade as it opens into Tibet, and further north to the northwestern provinces of China, which, from an Indian business perspective, is not very exciting. It should be noted, however, that a railroad linking Tibet with the rest of China opened only a few weeks before the pass was reopened (see Tibet railroad shows signs of strain, August 16).

Many think a land route along the old Stilwell Road in Assam state through Myanmar and on to Kunming, China, would be more interesting to Indian businessmen as it would provide a direct route to the bustling commercial heartland of southeastern China.

The Stilwell Road stretches for about 61 kilometers on the Indian side. The major portion, 1,033km in length, lies within the jungle-covered mountains and swampy valleys of northern Myanmar's Kachin state, while in China it is 632km. The northeastern Indian state governments have been urging the federal government to impress upon Yangon the need to reopen the Stilwell Road.

Along with the land route, there is a growing demand to open up more sea routes. The Indian government, to step up trade in the landlocked northeastern states, is urging Myanmar to open the port of Akyab (Sittwe) on the Bay of Bengal to Indian goods.

Another alternative would be permission to transit goods through the port of Chittagong in Bangladesh to reach the Chinese and Southeast Asian markets.

The recent provision for building a deepsea port off the coast of West Bengal has been made with an eye on the rapid economic development in the state and the need to reach out to Chinese and Southeast Asian markets. The project is still in the pre-feasibility stage and not yet even on the drawing board. Once this port becomes operational, any of the other alternatives will seem redundant.

India-China trade amounts to $17.4 billion and is growing at an annual rate of almost 38%. This figure is likely to surpass $20 billion before 2008. Currently, more than 90% of trade between China and India transits by sea via Tianjin - a port city some 120km from Beijing.

Shehla Raza Hasan is a freelance writer based in Kolkata.

(Copyright 2006 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing .)


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