Ease challenges of export to India: SANEM
Bangladesh, Nepal and Bhutan are facing escalated challenges to increasing and securing their exports to India's nearly $460 billion market, despite enjoying a duty free and quota free access, officials of South Asian Network on Economic Modelling (SANEM) said yesterday.
“These challenges are related to their limited export capacities, lack of diversification of export baskets, various non-tariff measures (NTMs) and procedural obstacles (POs) both at home and in the Indian market,” said SANEM Executive Director Selim Raihan.
The non-profit research organisation shared its views at a press briefing at its office on the future of regional integration in South Asia, a move that comes after the cancellation of the Saarc Summit to be held in Islamabad in November.
SANEM said cancellation of the summit casts a dark shadow over progress towards a unified South Asia. But it observed that Bangladesh, Bhutan, India and Nepal (BBIN), an initiative for sub-regional cooperation, can be an answer to the deadlock of regional integration in South Asia.
“Larger and effective achievements in such sub-regional architecture can exert some positive pressure on the region as a whole to avoid conflict,” said Raihan, also an economics professor at Dhaka University.
However, deeper integration among the BBIN countries has been impeded by several NTMs and associated POs, which are exacerbated by a lack of trade facilitation and cumbersome custom procedures at the land border ports, said the SANEM paper.
The organisation said there is substantial potential for a rise in intra-regional trade under the BBIN initiative. The largest export market in South Asia is India, said Raihan, citing India's import data in 2014.
Pakistan, Bangladesh and Sri Lanka are three other major markets with a market size of $59 billion, $46 billion and $21 billion, he said adding that Nepal's market size is nearly $8.5 billion and Bhutan's is $1 billion.
Citing BBIN, Raihan said India should play a more generous role, particularly to ensure access of products from these three countries to its market and to facilitate increased intra-regional trade.
There is sizeable scope to increase bilateral trade even among these smaller countries, although Bangladesh, Bhutan and Nepal primarily aim to increase their export to the Indian market, he added.
But the NTMs, POs and a lack of trade facilitation are responsible for high transaction costs in bilateral trade among the South Asian countries, according to the organisation. Streamlining the NTMs and removal of POs may intensify further market integration in the BBIN sub-region through the development of regional value chains.
“This will also encourage larger intra and extra regional investments in the BBIN sub-region, which can be instrumental in growth integration among these countries,” said the paper.
Citing the BBIN Motor Vehicle Agreement, Raihan said there are some signs of heightened commitments among the political elites of the BBIN countries to make the initiative effective.
Large infrastructural development is needed along with resolution of issues related to NTMs and POs to make this happen, according to the organisation.
It suggested improvement of roads, port infrastructure, customs services and a reduction of costs to facilitate trade. Integrated Check Posts (ICPs) at land ports can be established, it said.
SANEM also recommended exporters in Bangladesh, Bhutan and Nepal should develop their capacities to meet international standard requirements and become more competitive.
It also recommended cooperation, particularly among the standards organisations, for harmonisation of standards.
“Finally, there is a need to put much weight on regional investment and trade nexus,” said Raihan, adding that promotion of intra-regional investments in energy and infrastructure will be a key driver for greater success in the BBIN sub-region.
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