India Trade Relation (South Asia)

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Over the years, India has developed strong trade relations with its neighboring South Asian countries. India’s trade policy with most of these nations gives due importance on developing strong bilateral tie ups and over all be an asset to the economy of its own and the world.

India Trade Relations with Pakistan

Over the years the political relations between the two countries has had a direct effect on the business relations between them. And expanding trade between the two countries can be the best solution in getting close to solving the political disputes. There is tremendous scope of economic gains if trade between the two countries is increased. Both India and Pakistan are members of the South Asia Free Trade Area (SAFTA) but the trade is comparatively very low.

India- Pakistan Trade Policy
  • There is no fixed trade policy between the two countries. India has granted Most Favoured Nation Status to Pakistan in 1996. As of 2008-2009, Pakistan announced a new trade policy that projected a target of export of US $ 22.1 billion.
  • Pakistan follows a list of importable items from India which has around 1075 items mentioned in it.
  • The policy has not yet fixed any target for imports from India.
  • Inputs in Duty and Tax Remission Export (DTRE) will also be allowed to be imported from India, as per the Indian Trade policy.
India Pakistan Import, Export and Total Balance of Trade Over the time period 1987-88 to 1998-99: (In crores)

Year Export Import Total Balance Of Trade
1987-88 19.12 28.03 47.15 - 8.91
1988-89 36.20 72.17 108.37 -35.97
1989-90 51.39 53.79 105.10 -2.40
1990-91 73.60 84.49 158.09 -10.89
1991-92 98.61 149.98 248.59 -51.37
1992-93 151.26 73.50 224.76 -222.24
1993-94 200.66 136.48 337.14 +63.18
1994-95 179.71 165.61 345.32 +14.10
1995-96 256.80 150.80 407.60 +106.00
1996-97 558.12 128.36 686.82 +429.76
1997-98 537. 14 139.68 676.82 +397.46
1998-99 184.84 463.92 648.76 -279.08

India Trade Relations with Bangladesh

India and Bangladesh share a closer trade relation which has grown speedily since the 1990s. There has been a possibility for a free trade agreement (FTA) since some time, although there is no such compulsory grounds for both the countries to sign such an agreement.

Bangladesh Trade Policies:
  • The importing licensing policy by Bangladesh has been abolished.
  • The sugar and textile import has been removed
  • There has been a drastic tariff reduction.
  • Bangladesh gives special tariff rates for the Indian imports under the Bangkok agreement and SAPTA.

India Trade Relations with Bhutan

  • One of Bhutan’s main trade partners is India. A free trade system runs between India and Bhutan. The India-Bhutan Trade and Commerce Agreement have also been renewed for a period of further 10 years as it has expired on March, 2005.
  • The major items exported from Bhutan to India are electricity (from Tala, Chukha and Kurichhu Hydroelectric Project), cement, timber and wood products, minerals, cardamom, fruit products, potatoes, oranges and apples, raw silk and alcoholic beverages.
  • Major items exported to Bhutan from India exports are petroleum products, rice, automobiles & spares, machinery and fabrics.
  • As of 2009, imports from India reached Rs. 23.3 billion and it comprised 80% of Bhutan’s total imports. While Bhutan’s exports to India accounted to Rs. 20.5 billion and it resulted to 94% of its total exports.

Here is a summary of the figures of exports to imports from Bhutan by India: Rupees in Billion

Year 2001 2002 2003 2004 2005 2006 2007 2008 2009
Exports to Bhutan 6.98 7.58 10.26 10.19 12.80 13.05 15.09 17.33 23.3
Imports from Bhutan 4.70 5.13 5.92 7.76 9.97 14.48 22.72 21.48 20.5

India Trade Relations with Nepal

Economic Relations

Economic relationship between India and Nepal has its own distinctive attribute due to the geographical, social, ethical links between the natives of both the countries. The socio-ethical customs and ideals of the two nations greatly influence the trade relations between them.

Trade Policy of Nepal The Trade Policy of Nepal seeks to diversify trade by adhering to the following policies:
  • The public sector will work as a catalyst and help in expanding the private sector.
  • By promoting exports the country seeks to improve balance of payments as well as enhance foreign exchange earnings.
  • Enhanced quality of goods for export.
  • To attract direct foreign investment there has been an attempt of modernizing technology and management principles.
Trade Policy of India India’s policy mainly stresses on the following factors:
  • Withdrawal of quantitative restrictions (QRs)
  • Reduction and Rationalization of tariffs
  • Trade liberalization
  • Agreement with Nepal to control unauthorized trade.

ndia Trade Relations with Maldives

The Free Trade Agreement, India and Maldives
Few of the clauses of the Free Trade Agreement, signed by the Government of India and Government of Maldives are as follows
  • The Contracting Parties shall promote the development of trade and economic relations between their respective countries within the framework of their laws, rules and regulations.
  • Each Government shall accord to the commerce of the other Government treatment no less favorable than that accorded to the commerce of any third country.
  • All payments between the two countries shall be made in freely convertible currency, subject to foreign exchange regulations and other pertinent laws, rules and regulations effective in either country.
  • The exemption from customs duties and other similar charges on articles and samples intended for fairs and exhibitions, as well as their sale and disposition, shall be subject to the laws and regulations of the country where such fairs and exhibitions are held.

India Trade Relations with Srilanka

India and Srilanka have always enjoyed strong bilateral relations. To enhance bilateral trade and have close economic integration, both the nations agreed to trade under the Indo- Srilanka Free Trade Agreement (ISFTA). Some of the important clauses are:
  • The Indo-Srilanka Free Trade Agreement: (ISFTA)
  • The ISFTA was signed on 28th Dec, 1998 and it came into force from March1, 2000.
  • The Agreement stresses on enhancing bilateral trade and investment.
  • The Agreement covers only trade in goods, also stresses on exports on duty free basis and concessionary tariffs.
  • The Agreement doesn’t cover for elimination of non tariff barriers.

India Trade Relations with Afghanistan

With the prime objective of developing close bilateral relations and enhancing trade between the two nations, both the countries agreed to trade under the Preferential Trade Agreement. Some of the clauses nd objectives of the agreement are as:

The objectives of this Agreement are:-
  • To promote through the expansion of trade the harmonious development of the economic relations between India and Afghanistan.
  • To provide fair conditions of competition for trade between India and Afghanistan.
  • In the implementation of this Agreement the Contracting Parties shall pay due regard to the principle of reciprocity.
  • To contribute in this way, by the removal of barriers to trade, to the harmonious development and expansion of world trade.