India’s border trade: Nepal tops the list, Bangladesh second, Pakistan even behind Bhutan

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January 02, 2019 6:03 PM

The latest official data about India's border trade with her neighbours provides some interesting insight. It reveals that it is highly skewed in India's favour, and also tells that bilateral relations matter more than the trade potential and connectivity.

india, nepal, narendra modi, kp sharma oli, inland waterways, rail linksIndia’s total bilateral trade with Nepal in FY 2017-18 stands at USD 6.82 billion.

India’s border trade with its six neighbouring countries — China, Pakistan, Bangladesh, Nepal, Bhutan and Myanmar — accounts for a little over $12 billion, which is just 1.56% of India’s total global trade of $769 billion in FY2017-18. India carries out its border trade with the farther neighbour Afghanistan via Pakistan. Nepal tops the list of countries in terms of India’s border trade with its neighbours, leaving more populous countries Pakistan and Bangladesh behind.

Border trade with neighbours skewed in India’s favour

As per the latest official data given in Parliament, India’s total bilateral trade with Nepal in FY 2017-18 stands $6.82 billion, but it is highly skewed in India’s favor as India exports goods worth $6.38 billion and imports goods worth $437 million.

Bangladesh, which is 10 times bigger than Nepal in terms of size of economy and over five times bigger in terms of population, is second in terms of India’s bilateral border trade.

Bangladesh imports goods and services worth $4.13 billion. However, like Nepal, this bilateral trade is highly skewed in India’s favor as India’s export to Bangladesh accounts for $3.61 billion and imports account for just $517 million.

Surprisingly, much smaller Bhutan is way ahead of Pakistan in terms of India’s border trade with neighbours. India’s total border trade with Bhutan stands at $728 million, while India’s exports to the country stand at $526 million and imports at $202 million.

Border trade with Pakistan is less than that with Bhutan

India shares over 3,300 kilometers long border with Pakistan and it has granted Pakistan the status of most favoured nation for trade and commerce. Despite that India’s bilateral trade with the country through land route is less than half a billion dollars.

Surprisingly, India bilateral trade with Pakistan is not heavily skewed in its favor unlike Nepal and Bangladesh. India exports goods and services worth $263 million to Pakistan and imports goods and services worth $235 million, taking the bilateral trade figure to $498 million.

India’s bilateral border trade with Pakistan is just 7% of India’s bilateral border trade with Nepal. And it is just 12% of India’s bilateral border trade with Bangladesh.

And India’s total border trade with Pakistan is just two third of India’s total border trade with Bhutan, a country which has a population of just 8 lakh people and economy of $2.54 billion as against Pakistan’s population of 21 crore people and GDP of $304 billion.

Ostensibly, border hostilities between India and Pakistan have taken a heavy toll on potential of trade and commerce between these two nuclear armed neighbours, which have fought four wars since independence.

India’s border trade with China stands at $3.16 million, Myanmar $0.02 million, and Afghanistan $307.06 million. This data is exclusive of India’s trade with neighbouring countries carried out through sea routes, air cargo complexes, special economic zones.

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