By Raj Kumar Singh
Under Modi India thinks it’s interests regionally as well as globally and this is why he had invited leaders of SAARC nations to his swearing- in ceremony when he took the oath of office on 26 May 2014, five years ago. The fact that most of the SAARC members, barring Pakistan, continue to enjoy that preference during this term when it comes to the economic and trade cooperation among its neighbours. The cycle of neighbourhood policy smoothly took a positive turn when in the 17th Lok Sabha elections held in April-May 2019 the Bharatiya Janata Party (BJP), got a thumping /clapping majority for her Party crossing 300 hundred seats alone and 350 plus with traditional allies called National Democratic Alliance (NDA). This time, keeping in view the diplomatic preference and larger national economic/commercial interests on the day of oath 30th May 2019 the second BJP government invited BIMSTEC members, of which Pakistan is not a part. At the juncture, BIMSTEC needs lots of policy initiatives from its members, especially from its leading partners India and Thailand for the cooperation to make tangible benefits. “The lack of critical support – strong and clear political commitment, adequate financial resources, full engagement of business and industry, and optimal involvement of civil society – are among the obstacles, this regional institution is likely to face in coming days. Presently the seven country bloc includes Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand is key to India’s plans to strengthen its economic and trade footprint in the neighbourhood. The leaders of six member countries of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation or BIMSTEC (which includes India) have been invited to witness the swearing-in ceremony in line with India’s “neighbourhood first policy”,. It reflects India’s commitment and efforts for neighbour’s well-being under the new dispensation.
Background of BIMSTEC
On 6 June 1997, a new sub-regional grouping was formed in Bangkok under the name BIST-EC (Bangladesh, India, Sri Lanka and Thailand Economic Cooperation). Following the inclusion of Myanmar on 22 December 1997 during a special Ministerial Meeting in Bangkok, the Group was renamed ‘BIMSTEC’ (Bangladesh, India, Myanmar, Sri Lanka and Thailand Economic Cooperation). In 1998, Nepal became an observer. In February 2004, Nepal and Bhutan became full members. On 31 July 2004, in the first Summit the grouping was renamed as BIMSTEC or the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation.
The main sectors of BIMSTEC along technological and economic cooperation are South Asian and Southeast Asian countries along the coast of the Bay of Bengal. The 8th Ministerial Meeting held in Dhaka in 2005 but the 4th sector was added in 11th Ministerial Meeting in New Delhi to provide cooperation to one another for the provision of training and research facilities in educational, vocational and technical fields and also to promote active collaboration and mutual assistance in economic, social, technical and scientific fields of common interest. It also provides help to increase the socio-economic growth of the member countries.
In answer to a question why this emphasis has been given is simple? In fact this group is key to India’s plans to strengthen its economic and trade footprint in the neighbourhood. The two decades of BIMSTEC’s existence have achieved very little, and Modi government wants to reverse this trend by bringing in a significant improvement in its economic engagement within the region, without further delay. The potential trade opportunity that beckons BIMSTEC nations seems to be as high as $250 billion, as compared to the current trade of $40.05 billion, as indicated in a knowledge paper “Reinvigorating BIMSTEC” published by apex industry chamber FICCI in 2018. In an elaborative statement, the Knowledge paper described BIMESTEC’s region as home to 1.5 billion people, approximately 22 per cent of the world population and with a combined GDP of $2.7 trillion, it carries the potential to catapult regional trade and investment to the next level and provide a framework to achieve sustainable development”. In the context there is an urgent need to diversify India’s export markets which becomes more crucial in the backdrop of growing protectionism in the country’s traditional export destinations like the US.
Key areas of cooperation
As early as 2008, BIMSTEC members had identified over a dozen sectors including trade and investment, technology, energy, transport and communication, tourism, fisheries and agriculture as priority areas of cooperation. In 2016, Blue Economy and the Mountain Economy were also added to this list as areas such as aquaculture (both inland and coastal), hydrography, seabed mineral exploration, coastal shipping, eco-tourism and renewable ocean energy were found to be promising. The FICCI report points out that intra-regional trade among BIMSTEC countries was about $40.5 billion in 2016 (about 6 per cent) with India having 50 per cent share ($21 billion), followed by Thailand 30 per cent ($12.2 billion) and Myanmar 14 per cent ($6.1 billion). Negotiations for a free trade agreement among BIMSTEC members have been going on for some time, though without much success. A 2018 policy brief by Observer Research Foundation (ORF) states that BIMSTEC’s significance lies in the fact that it was formed out of the necessities of the member countries. “India was motivated to join BIMSTEC as it wanted to enhance its connectivity with ASEAN countries. For Thailand, BIMSTEC helps achieve the country’s Look West Policy. BIMSTEC also helps smaller countries such as Bangladesh, Nepal and Bhutan to develop connectivity with ASEAN countries, the hub of major economic activities globally”, ORF note says. FICCI report endorses this observation. “In 2016, BIMSTEC member states together had a total export of $536.8 billion and an import of approximately $641.7 billion, thereby making it one of the most active trade-driven regional blocs of the world.
In 2017, FICCI conducted a perception survey to understand what various stakeholders – corporate, governments etc – think about BIMSTEC’s potential and its current status in terms of economic relations, ease of doing business, connectivity, policy advocacy, sustainability and development. The survey respondents rated agriculture, processed foods and energy, as the most preferred sectors for trade and investment, followed by tourism including medical tourism and engineering. Poor infrastructure and connectivity were stated as the main reasons for low intra-regional investment in the region by the respondents of the survey. Over 90 per cent respondents said a BIMSTEC Free Trade Agreement (FTA) in goods and services would significantly improve trade and investment within the region.
As percentage of India’s overall foreign trade, BIMSTEC engagement might be small, but it is a fact that India’s trade with the rest of BIMSTEC countries has full-fledged growth at an annual rate of 10.4 per cent as compared to intra-BIMSTEC trade growing at 0.62 per cent. “India’s exports to BIMSTEC nations rose 16.6 per cent in 2014-15 to $ 22.3 billion, while its imports from the same countries rose 8 per cent to $9.3 billion during the year,” And thus, in the light of new context and understanding, India has begun an added emphasis on BIMSTEC, instead of SAARC.