India, three neighbours to ink road pact to boost trade

New Delhi: Four South Asian neighbours-Bangladesh, Bhutan, India and Nepal-are set to sign an agreement next month to connect their countries by road and boost trade and economic activity.

A notable exclusion is Pakistan, which has refused to sign a similar pact with other South Asian Association for Regional Cooperation (Saarc) members.

The bloc comprises Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka, who traded among themselves goods and services worth $20 billion in 2013-14, a 12.36% rise over the previous year.

Transport ministers of the four so-called BBIN countries are expected to finalize and sign the motor vehicles agreement at Thimphu, the capital of Bhutan, on 15 June to facilitate the seamless movement of vehicles within the region, said three Indian government officials.

The BBIN pact was proposed at the Saarc summit held in Kathmandu in November.

The summit was to witness three key pacts being inked-the Saarc Framework Agreement for Energy Cooperation, Saarc Motor Vehicles Agreement and Saarc Regional Railways Agreement.

However, only one agreement-the regional electricity pact-was signed after Pakistan blocked the other two.

The motor vehicles pact seeks to open up vehicular traffic in order to give an impetus to trade and sub-regional cooperation -a key element of Prime Minister Narendra Modi’s neighbourhood policy.

India is expected to be represented at the 15 June signing by Nitin Gadkari, minister for roads and highways, one of the officials cited above said.

The second official said that India was hopeful that “the ministers would approve the text and sign the pact at the meeting”.

Senior transport ministry officials of BBIN countries met in February in Kolkata where the text of the agreement was agreed, he added.

“Better road connectivity, we hope, will enhance trade and economic activity besides allowing increased people-to-people contact among these countries,” the third official said.

“It was decided to go ahead with the pact since India has bilateral pacts with all three countries but they do not have similar pacts between themselves. So if a truck from Nepal needs to go to Chittagong port in Bangladesh, an agreement among BBIN countries will help,” the third official added.

In his speech at the Kathmandu summit, Modi noted “a rising tide of integration” across the world.

In contrast, he said, South Asia needed “urgent” efforts for regional integration, adding “it’s still harder to travel within our region than to Bangkok or Singapore; and, more expensive to speak to each other.”

Modi also noted that ties between the Saarc countries would grow “stronger when we connect the lives of the ordinary citizens of our countries. That is why connectivity and services by rail and road are so important”.

According to Biswajit Dhar, professor of economics at New Delhi-based Jawaharlal Nehru University, if the BBIN pact materializes, then it will be “an excellent development... taking an integrated view of the economics of the sub-region and then trying to harness it”.

“It will be the best way of overcoming the logjam that we see at the Saarc level. It will show Pakistan it cannot hold the region to ransom,” he said.

Better connectivity would boost trade and economic activity in the region and also help India develop its North-East, which in turn could become a market for countries like Bangladesh.

“This will open up economic opportunities and bring prosperity to the region,” Dhar added.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.