neftake

Nepal as a Part of South Asian Common Market and Land Bridge between Two Large Economies

The economic and trade integration process in South Asia is moving at a very slow pace as there are many roadblocks in the way of integrating transport, communication, trade and related infrastructures. The economic cooperation framework of SAARC was based on the pledges of its leaders to make South Asia an economic union by 2020 encompassing the stages of preferential trade agreement to free trade area, customs union, and common market. But, the implementation of free trade area agreement over the last ten years has seen tepid growth since countries are still negotiating over the large number of sensitive lists - an obstruction to free trade - and are mired in the maze of non-tariff barriers. In view of slow pace of economic integration, the member countries are now aiming at achieving deeper integration by 2030 which of course coincides with the deadline of sustainable development goals (SDGs). It is likely that South Asia will emerge as the common market by the time, only by realigning the current course of action on economic integration.

The pivot of international trade is shifting to Asia. Nepal is well positioned and remains at a strategic location between the two larger and fast growing economies of the continent. Both India and China are emerging as the manufacturing hub of the world. Increased connectivity between these two economies provides opportunity for Nepal to grow and develop its services industry and participate in the value chain of manufacturing. The land and maritime silk routes connecting Central Asia, Europe and South and South East Asia and establishment of Asian Infrastructure Investment Bank (AIIB) under the Chinese initiative will provide greater connectivity in the region. Nepal can become a land bridge between India and China, and leverage on the extensive transport infrastructure of the two economies. Indeed, the populous states of India like West Bengal, Bihar and UP could be connected to Tibet and Sichuan province of China through Nepali territory. Nepal should capitalize on this opportunity to improve its economic scenario and to attain the goal of becoming a middle income country by 2030.

Purushottam Ojha
Former Secretary, Ministry of Commerce and Supplies
More articles by Purushottam Ojha
Article views: 388