Strengthening relations with Myanmar

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: countries share a border they do not trade at the border. India–Myanmar should resume full-fledged trade at the border. Compared to ocean trade, border trade in value terms has been only 1% ($3.5 million in 2004) of the total bilateral trade.

The present form of border trade is restricted and not the MFN type. Border trade between the two countries is conducted at Moreh (India)–Tamu (Myanmar), which was opened in 1995. The second border trade point at Zowkhathar–Rhi, opened in 2004, is not active. To improve border trade, India has offered assistance to construct the Rhi-Tiddim and Rhi-Falam roads along the Chin-Mizoram border.

India is relatively restrictive to Myanmar’s exports. India’s weighted average tariff in 2005 on imports from Myanmar was about 17.48% with the exchange of 270 tariff lines, whereas the same in case of Myanmar on imports from India was only 2.62% with the exchange of 2,071 tariff lines. India’s higher tariff is negating the distance advantage and escalating trade costs.

Indian investment in Myanmar is very small till date. Only one Indian company, Tractors India, has set-up a manufacturing unit in Myanmar. However, in order to attract overseas investments, Myanmar has to carry out large scale, domestic reforms in the money and banking sector. Otherwise, wage, resource and locational advantages will not generate any substantial dividend to Myanmar.

Modernisation of Land Customs Station at Moreh in Manipur would pave the way in formalising the informal rent-seeking local economy. In this regard, the proposed Integrated Check Post (ICP) at Moreh is certainly a good beginning. At the same time, India and Myanmar also need to simplify customs procedures and agree to the transit arrangement following their commitments in WTO.

Setting up a Special Economic Zone (SEZ) at the border will give a boost to the local economy at both sides of the India–Myanmar border. This will attract FDI in resource-based industries, such as newsprint, wood and wood products, agriculture and food processing, among others.

Cross-border projects are essential to foster mutually beneficial cooperation. In order to take the bilateral relationship forward, India has major responsibilities. India should link Manipur and Mizoram with its mainline railway corridor (NF Railway) and help Myanmar re-establish its railway network. Without a modern and harmonised railway system in Myanmar, India’s dream to link Delhi with Hanoi or to hook up with the Trans-Asian Railway (TAR) will be unfulfilled.