Business & Policy | Finance & Economy

Trade With South Asian Neighbours Stagnant

Published: April 15, 2023

According to estimates from 1948, India’s trade with South Asia, more specifically the area between Kabul and Chittagong, was close to 19%. This figure appears in works of literature like Rabindranath Tagore’s story about the Kabuliwala, an Afghani merchant who travels to Calcutta to sell dried fruits. Just 20 years later, according to a report by the Asian Development Bank, the share had fallen to single-digit levels.According to government trade figures as of February 2023, India’s international commerce has expanded by 39% since 2019, while that of South Asia has increased by 11%. The investigation also took into account comparable time periods from prior fiscal years. Since 2018–19, exports to South Asia have increased by 9% while imports have increased by 25%.

China was more influential than India in Data from the World Bank demonstrates trade with South Asian nations long before the outbreak. In 2019, China sent items to South Asia worth $40 billion compared to India’s $22.6 billion. China trades more with the seven South Asian nations overall than India does, by a margin of 65%.

India provides South Asian nations with lower tariff barriers, but China still dominates. India’s weighted average tariff for South Asian nations was less than 1%, compared to China’s weighted average tariff of almost 3%. India imposes much lower taxes on goods entering South Asia than China does on goods entering the rest of the globe.

Trade in South Asia is hampered by para-tariffs (border taxes and penalties), complex regulations, inadequate infrastructure, and bad logistics , in accordance with a study by the think tank Brookings Institution. India is attempting to improve logistics by planning rivers that will reach Thailand.

According to research, India may profit from a roughly threefold increase in South Asian commerce. Increased connectivity in the area can benefit the nation’s northeastern states and strengthen its ties to East Asia.

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