The recently concluded visit of Nepal's Prime Minister Pushpa Kamal Dahal ‘Prachanda’ to India was significant on many counts, as it was a step taken forward to end the trust-deficit of recent times. Now it's time to assess how it's crucial to broaden the ambit of trust-filled bilateral ties to foster trilateral cooperation among India, Nepal and China.
To review trends in India-Nepal-China trade and investment, the main challenge is to identify constraints and recommend effective policies, which can be implemented without being at loggerheads with the political fundamentals of the land. First and foremost, the need of hour is to evaluate sectors/sub-sectors of comparative advantage in these countries in goods and services, and shape up the policies in a positive spirit. The next big action required is to examine issues related to informal trade and border trade between India and Nepal and find ways to remove bottlenecks to make things different and better.
It needs to be underlined that Nepal seeks to be an economic corridor between west China and northern/eastern India and, furthermore, a transit transport corridor for overland trade between India, China and Central Asia. It wishes transport connectivity as well as economic connectivity. The two concepts, though related, are not identical. Any pre-feasibility and feasibility study must take both these factors fully into account to maximise development benefits for all.
Prospects for China-Nepal-India connectivity across the Himalayas and through Nepal are bright, given the fact that: (a) a 100 km per hour from Xigatse to Keyrung/Girong is technologically feasible according to Prof Zhiu Yuhui of Jiatong University, Beijing; (b) Nepal is a friendly buffer state lying in between two emerging global economic power houses making Asia as the fulcrum of the global economy of the 21st century, (c) it is closer and faster to trade through Nepal than by sea from northern India to southwest China, (d) China is South Asia's largest trading partner and will probably be the largest investor in infrastructure, (e) the BIMARU States of India need to be brought into the globalisation process to secure sustained high GDP growth rate with high employment for India as a whole and (f) geo-politically, geo-economically and geo-psychologically it is the modern reality that no regional power can keep its regional hegemony intact as its exclusive sphere of influence, with the probable trends in globalisation factored on, and forced by, the evolving technological revolution.
It is believed that each of the 24 Provinces (in the mainland) have their OBOR Plans and we need dialogue with these provinces like Quinghai, Sichuan, (Guangxi, Guizou,)Yunan, and TAR, including Chongqing municipality .
Policy-wise, connectivity between China and India via Nepal is still in the air owing to pending border issues between China and India in the Himalayas. In such a geo strategic scenario, the pending development of deeper entente has to cordiale and confidence building measures have to be speed up between the two nations, to strategically undertake Nepal-China joint preliminary and feasibility studies of two transport links, to begin with, (a) Rasuwagadi-Kathmandu Valley-Hetauda-Burgunj and (b) Rasuwagadi-Kathmandu Valley-Pokhara Valley-Bhairawa.
The size of railway infrastructure and frequency of train service will depend on the volume of traffic demanded from, and supplied to, various Chinese economic centres from the growth corridors along the railway artery. We have in mind Xigatse, lhasa, Chengdu and Chongqing as the pivotal growth centres on the transport axis. Kunming could also be included but it is best left to the BCIM economic corridor since it will be much closer provided India agrees to extend the BCIM transport corridor to Bhutan and Nepal. Dhaka and Kunming could serve as the economic bridge head economy for inter regional integration of SAARC with ASEAN, particularly the Indo China peninsula.
To take on the idea further, Kathmandu based South Asian Institute of Management (SAIM) aims to study on the ‘Prospects and Feasibility of Trilateral Cooperation’, with analytical assessment and action plan. Delhi-based think tank Observer Research Foundation (ORF) has been partnering with SAIM on this. The underlying objective is to improve the trade and investment scenario in India, Nepal and China. It represents an important initiative to strengthen the economic relationships among the neighbours.
We commence to do planning and pre feasibility studies, for each of the axes, namely (a) Rasuwagadi-Kathmandu- Birgunj and (b) Rasuwagadi-Pokhara- Bhairawa to see what volume of traffic must be generated frown within Nepal itself to make the rail project financially viable, so that the investment can be recouped in a reasonable time. To maximise social benefits from the two railway infrastructure projects — suggested and agreed to during KPS Oli’s visit — economic feasibility must also be undertaken, in addition to financial feasibly — to derive the appropriate fiscal and monetary policy to support the projects.
A sophisticated methodology must be adopted for the envisaged joint Nepal China studies. So much the better if Indian think-tanks and the Industry Chambers join hands for Trade & Comparative Analysis (on value, volume), assessing Gravity Model to predict the flow of goods, estimating Supply Chain Potential (through survey of private and public sectors to estimate the potential for relocation of industries, measuring intra-industry and inter-industry trade of particular products and for executing Geographical Simulation modelling (to predict the long-term impact of infrastructural changes in all three countries). A strong interest has been expressed to undertake joint studies in China, especially Beijing, Kunming, Sichuan, lhasa think-tanks that SAIM is in contact with. It looks forward to a similar positive response from India and Nepal.
(Rana is professor, South Asian Institute of Management and a former Nepalese Finance Minister; Thakur is a New Delhi-based journalist and public policy professional)