In recent years, the term “connectivity’’ has become a buzzword, especially in South Asia. This is considered, and rightly so, as a very important means to boost economic transaction as well as people to people social relations across the countries. Thus emerged the Bangladesh, Bhutan, India and Nepal (BBIN) Motor Vehicle Agreement (MVA) which was signed in 2015. For landlocked South Asian countries like Bhutan and Nepal, it must be a very welcome step. The BBIN MVA should make it easy for them to access ports in India and Bangladesh for intra-regional and extra-regional trade.
But will this actually be the case?
The MVA will be effective in its purpose of trade facilitation only when bilateral and/or regional trade agreements satisfactory to all the parties are in place. But look at the existing agreements. Are they optimally facilitating trade between and among the parties? The SAARC free trade area (SAFTA) treaty is there but it is not implemented in the true spirit of free trade. The bilateral trade treaties between the countries of the region are felt to be unsatisfactory. For example, Nepal is suffering a huge trade deficit with India and efforts to increase exports are thwarted frequently by India’s non-tariff barriers. That is why fresh negotiations are being made for the Nepal-India Trade and Transit Treaties. Secondly, for the success of the MVA, potential pockets of trade must be identified and developed in each country. Are they identified? And what about the products they will produce and trade? And are these locations well connected to international standard roads? If not, who will invest and upgrade these roads? Are such investments economically viable? And how will the issues related to currency of payments be addressed?
Third, its success will require a facilitating transit treaty. The existing treaty of transit between India and Nepal is restrictive - it allows movement of goods only between Kolkata (now also from Vishakhapatnam) and Nepal. Will there be a transit treaty that allows free movement of goods among the countries without any hindrances?
Fourth, and perhaps the most important issue is that the movement of goods under this MVA will be through India’s hyper-sensitive region, nicknamed the ‘chicken-neck’. In this context, how do the countries that are parties to this agreement resolve the border management and security concerns?
Bhutan’s parliament has already rejected to ratify the BBIN MVA based on various concerns. So, how will the other parties plan to resolve similar concerns that may exist in their respective countries?
A lot will depend on how India moves ahead with this proposal. As it was India that first came up with it, it is India’s duty to see to it that the proposal gets implemented. That means, India has to take the lead in developing models to finance the infrastructure needed in the member countries. It will also have to take the lead in setting up a fund to help the people of the regions of the respective countries that are targeted beneficiaries of this initiative. This is particularly important as the people of these targeted beneficiary regions are poor and cannot invest in economic activities that this initiative is supposed to facilitate. If these people get help to start their own businesses – agriculture, agro-processing etc - that will help to take the MVA initiative to the next level.