Strengthening relations with Myanmar

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India shares an abundance of economic interest with Myanmar today, particularly in the backdrop of India’s Look East Policy. Myanmar is important for India because the country holds over 1.5 million People of Indian Origin (PIO)—largest outside India.

Why is Myanmar so keen to renew its relationship with India? First, heavy migration of mainland Chinese people over the last few decades has forced Myanmar to seek an alternate partnership in the region. Second, Myanmar does not want to experience any more the awful side of free trade–the dumping and transit ground of cheap foreign goods and services.

Instead, Myanmar wants to enjoy the good side of globalisation–to become a prosperous nation. Third, India has been providing higher market access to Myanmar, which has been helping them to build resource-based domestic industry and to enjoy comparative advantages of its energy resources. Finally, military ruler of the country wants to give a taste of democracy to its people from 2010 onwards.

How is the relationship then growing better and better between India and Myanmar? India is witnessing rising trade in goods with Myanmar. India is now Myanmar’s fourth largest trading partner, next to Singapore, China and Thailand. The bilateral trade in goods was about $750 million in 2006, up from $227.23 million in 2000, of which India’s export to and import from Myanmar were $38 million and $612 million respectively.

India’s import from Myanmar is about 4.5 times higher than its export to that country. India sources mostly raw materials from Myanmar, of which two commodity groups, namely, edible vegetables and related products, and wood and wood products, share 63% and 34% of India’s total import from Myanmar, respectively. Compared to import, India’s export to Myanmar is diversified, mostly finished goods, such as pharmaceuticals, iron and steel, electrical machinery and equipment, among others.

India provides higher market access to Myanmar, compared to China (see table). Myanmar’s export to India ($555.10 million in 2006) was higher than Myanmar’s export to China ($229.70 million in 2006). India has also provided over $50 million Line of Credit to Myanmar in the past five years in order to help that country to expand its exports to India. However, the Myanmar’s trade structure with China will change completely once export of gas to China is resumed later this year.