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Border Trade Between India And Myanmar Through Moreh: Its Trends And Problems

Introduction:

No economy in the world is perfectly independent. Every country is interdependent to one another economically. In the absence of international trade, it will be very difficult for a country to develop. As a result of this, international trade is regarded as the engine of growth of an economy. Border trade between India and Myanmar, which is a part of India’s international trade, has great potential to influence economically for the development of North Eastern India and Myanmar.

Before signing the Indo-Myanmar Border Trade Agreement, there was traditional exchange of goods between the people living along both sides of the border. The Kachins in Myanmar-China border, the Karens in Myanmar- Thailand border, the Rohingyas in Myanmar-Bangladesh and the Tamil chettiars and Nagas and the Kuki, Chin and Mizo in India-Myanmar border have been carrying on border trade. It was mainly because of this fact that the hill tribals inhabiting the border areas along the India-Myanmar border enjoyed the facility of free movement upto 40kms. on either side on the entire length of 1643kms. The reason being that they had close affinity and cultural and economic ties. They enjoyed this facility until 1968 when GOI introduced a permit system unilaterally to check entry of undesirable elements and insurgents.

Border Trade Through Moreh-Tamu:

The Indo-Myanmar Border Trade Agreement was signed on 21 -1 -’94 and border trade through Land Customs Station (LCS), Moreh was opened on 12-4-95. Foreign trade can be carried out through Moreh border under 3 systems namely -

(i) Traditional Exchange under Barter Mechanism

(ii) Border Trade of 22 Agreed upon Exchangeable Items

(iii) Normal/Regular Trade (with or without opening of letters of credit) as per EXIM policy now Foreign Trade Policy (2004-2009)

Traditional Exchange:

This is also known as free exchange of goods by small traders. Under this system, locally produced items for value upto US Dollar 1000 can be exchanged between local people residing upto 40km on the either side of the border under simplified documentation without Importer Exporter Certificate (IEC) from Director General of Foreign Trade(DGFT), Guarantee Receipt(GR) formalities and by way of head or non motorized transport system. Under this system, import/export is to be balanced by exporting/importing goods of equivalent value within two days. These exchanged goods are to be consumed within 40km and exchangeable items are 22 items listed in Annexure 1 of the Agreement. No duty is chargeable on the goods.

Border Trade of 22 Agreed Items:

Most part of the Border Trade through Land Custom Station, Moreh is functioning under barter mechanism. 22 items are agreed to exchange upto US dollar 20,000 with GR formalities as per Director General of Foreign Trade. Under this system, traders should possess IEC allotted by DGFT. The import/export has to be balanced by exporting/importing goods of equivalent value within six months. Under this system, export from India to Myanmar shall precede import into India from Myanmar. No monetary transaction is involved under barter mechanism. GR formalities are required if the value per transaction exceeds US $ 1000. All export/import undertaken under Barter Mechanism will be covered by proper Customs Documents as prescribed for the purpose of International Trade.

Normal/Regular Trade:

Indian traders can also export any other goods not included in Annexure I to Myanmar through LCS, Moreh as permissible under the EXIM policy now Foreign Trade policy (2004-2009) as regular/normal export and realize the sale proceeds in any freely convertible foreign exchange like US dollar. For the purpose of this trade United Bank of India, Moreh branch, has been nominated by the Indian Authorities to act as Indian designated bank on Indian side (through Moreh border) to facilitate trade related transactions and similarly the Myanmarese authorities have nominated Myanmar Economic Bank, Tamu in Myanmar side.

Indo-Myanmar Relations:

The following strategic rationale determines the contours of Indo-Myanmar relations:

(1) Myanmar is located at the tri junction of East Asia, South Asia and South East Asia.

(2) Myanmar is the second largest of India’s neighbors and the largest on the eastern flank.

(3) Myanmar provides the Eastern littoral of the Bay of Bengal. An unfriendly Myanmar hosting foreign naval presence would pose a threat to Indian security.

(4) Myanmar has a big border with China in the north contiguous with the Sino-Indian disputed border which has many implications.

(5) India has both a land border (1643 km) and a maritime boundary with Myanmar in the Bay of Bengal, four Indian states (Arunachal Pradesh, Nagaland, Manipur and Mizoram) border Myanmar (Kachin & Chin states and Sagaing Division)

(6) China can gain access to Indian Ocean through Myanmar.

Economic Importance:

1) Myanmar is India’s gateway to ASEAN as it is the only country of this grouping which has a land and maritime boundary with India. With India becoming a summit level partner of ASEAN and a member of the East Asia Summit, improved relations with Myanmar will be beneficial in many respects. Besides, Myanmar and India are members of some sub regional groupings such as the BIMSTEC and the Mekong Ganga Co-operation.

2) China has raised its economic profile in Southeast Asia, particularly in Myanmar despite the sanctions imposed by the West. India should not be left behind especially in view of the large oil and gas resources available in Myanmar and much needed by India.

Security Consideration:

The major security considerations are -

1. Insurgency in the North Eastern states of India-some of the insurgent groups have established camps in Myanmar and operating from Myanmarese territory.

2. Smuggling of arms (by both land and sea)

3. Drug trafficking and narco-terrorism.

4. Illegal immigration from Yunnan into Northern Myanmar and association of Chinese workers in road construction activities.

From 1948 to 1962 there were a friendly and cordial relationship between the two countries, but there was a strained relationship from 1962 to 1992-1993. From 1993 onward India reversed its stance with a more realistic and pragmatic policy and started engaging the military regime. Since then, the relations have been growing steadily and there has been all round progress in political, economic and military relations as well as co-operation in technology, HRD, infrastructure, education, health and other fields.

Normal/Regular Trade:

Indian traders can also export any other goods not included in Annexure I to Myanmar through LCS, Moreh as permissible under the EXIM policy now Foreign Trade policy (2004-2009) as regular/normal export and realize the sale proceeds in any freely convertible foreign exchange like US dollar. For the purpose of this trade United Bank of India, Moreh branch, has been nominated by the Indian Authorities to act as Indian designated bank on Indian side (through Moreh border) to facilitate trade related transactions and similarly the Myanmarese authorities have nominated Myanmar Economic Bank, Tamu in Myanmar side.

Indo-Myanmar Relations:

The following strategic rationale determines the contours of Indo-Myanmar relations:

(1) Myanmar is located at the tri junction of East Asia, South Asia and South East Asia.

(2) Myanmar is the second largest of India’s neighbors and the largest on the eastern flank.

(3) Myanmar provides the Eastern littoral of the Bay of Bengal. An unfriendly Myanmar hosting foreign naval presence would pose a threat to Indian security.

(4) Myanmar has a big border with China in the north contiguous with the Sino-Indian disputed border which has many implications.

(5) India has both a land border (1643 km) and a maritime boundary with Myanmar in the Bay of Bengal, four Indian states (Arunachal Pradesh, Nagaland, Manipur and Mizoram) border Myanmar (Kachin & Chin states and Sagaing Division)

(6) China can gain access to Indian Ocean through Myanmar.

Economic Importance:

1) Myanmar is India’s gateway to ASEAN as it is the only country of this grouping which has a land and maritime boundary with India. With India becoming a summit level partner of ASEAN and a member of the East Asia Summit, improved relations with Myanmar will be beneficial in many respects. Besides, Myanmar and India are members of some sub regional groupings such as the BIMSTEC and the Mekong Ganga Co-operation.

2) China has raised its economic profile in Southeast Asia, particularly in Myanmar despite the sanctions imposed by the West. India should not be left behind especially in view of the large oil and gas resources available in Myanmar and much needed by India.

Security Consideration:

The major security considerations are -

1. Insurgency in the North Eastern states of India-some of the insurgent groups have established camps in Myanmar and operating from Myanmarese territory.

2. Smuggling of arms (by both land and sea)

3. Drug trafficking and narco-terrorism.

4. Illegal immigration from Yunnan into Northern Myanmar and association of Chinese workers in road construction activities. From 1948 to 1962 there were a friendly and cordial relationship between the two countries, but there was a strained relationship from 1962 to 1992-1993. From 1993 onward India reversed its stance with a more realistic and pragmatic policy and started engaging the military regime. Since then, the relations have been growing steadily and there has been all round progress in political, economic and military relations as well as co-operation in technology, HRD, infrastructure, education, health and other fields.

Hurdles in the Progress of the Trade:

If we analyze the trend of trade between India and Myanmar through Moreh, till 1997 -98 there was an increasing trend and thereafter there was a continuous downfall in the trade and it was only in the year 2006-07 to have a sudden increase in the volume of trade. There are various reasons for downfall in the trade during the period 1998-99 to 2005-06. These stumbling blocks in the growth of border trade are being discussed below -

(i) Number of Exchangeable Items:

Trade in the barter and exchange mechanism is restricted to only 22 items as mentioned above. Moreover, the 22 listed items are grown and available on both sides of the border, though in bulk on the Myanmar side, which has a surplus. Goods of high demand in both sides are not included in the list. It is found that all these items are being smuggled illegally.

(ii) Multiple Check Post on NH-39:

Multiple check posts and obstruction on movement of import/export goods on the National Highway- 39 and 53 running through the state of Manipur and Nagaland have been a major stumbling block. Representations received from the trade indicate that there are 53 check posts of various depts. of the Govts. of Manipur and Nagaland from Moreh to Dimapur on NH-39 and as many as 12 check-posts of the Govt. of Manipur on NH-53.

Out of many check-posts/army/Manipur police/M.R. posts between Imphal and Moreh, real checking are done in the following posts.

(i) Customs Preventive Force, Moreh

(ii) Moreh Police Gate, Moreh

(iii) 24 Assam Rifles, Khudengtabi

(iv) 165 G-coy, Assam Regiment, Lokchao

(v) Tengnoupal Police Station, Tengnoupal

(vi) 18 Assam Rifles, Tengnoupal

(vii) 44 Assam Rifles, Bongyang

(viii) Police out post, Pallel

(ix) Pallel customs.

(iii) MoU to be Signed between the Two Designated Banks:

In the past, no MoU has been signed between the UBI, Moreh Branch and the Myanmar Economic Bank at Tamu, Myanmar; both designated authorized banks to enable normal trade under the letter of credit system.

(iv) Restrictions on Export/Import of Plant and Plant Materials:

Growth of export trade from India to Myanmar is adversely affected because of the restrictions on export of plant and plant materials by Ministry of commerce which restricts export of such items only through the ports of Mumbai, Kolkata, Cochin, Delhi, Chennai, Tutticorine and Amritsar. Import of plant and plant materials are restricted through the Moreh Land Customs Station. Agartala Land Customs Station and Karimganj Steamerghat and Ferry Station are only notified entry points for this purpose. As a result of this restriction trade has been suffering.

(v) Restriction on the Import of Timber:

The import of Myanmar timber is allowed through every post of India except through Moreh. There is a tremendous potential for timber imports from Myanmar as the location of Moreh is in the vicinity of vast timber producing areas of Myanmar and the scarcity of timber in our own country holds a natural advantage for trading in Myanmar timber. As per the decision of High Powered Committee’s meeting held on 19-06-2003, import of timber from Myanmar was allowed only under the condition that it will be used for local consumption only and will not be allowed to be moved outside Manipur.

(vi) Collection of Taxes:

Collection of sales tax, forest royalty and other taxes on import of goods by the state government of Manipur has added to the tax burden of the Indian importers. High transportation cost and such taxes reduce the cost-effectiveness of the trade.

(vii) Illegal Collection Taxes:

The main vehicles plying on this national highway from Imphal to Moreh are Bus, Tata Sumo, Maruti Van and Truck for the purpose of transportation of goods and passengers. So many underground organizations are levying illegal taxes from these vehicles.

As per the information collected, for the Tata Sumos plying from Imphal to Moreh, Rs. 35,000/- are paid annually per vehicle to different underground organizations of the state. In addition to this, Rs. 130/- per day per vehicle is also paid to a particular underground organization and Rs. 400/- per month per vehicle to some other organizations. Financial assistance as well as vehicles are provided freely to various student organizations and civil organizations for any issue or function related activities. From the Maruti Vans, Rs. 20,000/- per vehicle is collected annually by different underground organizations. On the way from Imphal to Moreh, security forces at Pallel (state police & IRB), Saivom, Tengnoupal and Moreh police Rs. 10 each are collected and on the returning journey from Moreh to Imphal at the rate of Rs. 20/- each posts mentioned above. From the trucks carrying goods at this highway, Rs. 25,000/- annually per vehicle are collected by different underground organizations and in each trip illegal taxes of around Rs. 1950/- are also needed to be paid to the police personnel of these check posts.

(viii) Community Crises and Law and Order Problem of Moreh Town:

Moreh town is a place of different communities with Kukis, the highest number of population. There were community crisis between Kukis and Tamils and Kukis and Meiteis. In such situation, it is very difficult to have a free and smooth trade. In addition to this, there are frequent bands and blockades in the Moreh town as well as in this highway.

(ix) Military Junta in Myanmar, a Government with Uncertainty:

The Union of Myanmar is military regime. The current head of the state is Senior General Than Shwe, who holds the posts of ‘˜Chairman of the State Peace and Development Council’ and ‘Commander in Chief of the Defense Services’. General Soe Win is the Prime Minister. At any moment, there may be a military coup and with the change of leader any unpredictable changes may come up. The movement for restoring democracy in the country has been continuing and with the hike of oil prices in the country, an uprising against military junta has started recently by the pro-democracy activists and monks. It is difficult to say the future of the trade with such an uncertain military govt.

(x) Lack of Infrastructural Facilities for International/Border Trade:

With a weight bridge, a Trade Centre building, a warehouse with no working condition and a bad conditioned Two -lane road, it is very difficult to prosper the cross border trade between the two countries.

(xi) Exchange Rate of Currencies i.e. Kyat and Indian Rupee:

Myanmar’s currency is the Kyat. It must be one of the most unstable currencies in the world. At present in the market, it sells at the rate of Rs. 100 to Kyat 3100. In the year 2005, the rate was Rs. 100 to Kyat 2000. In the year 2000-01, it was Rs. 100 to Kyat 750 and few more years earlier it was Rs. 100 to Kyat 350. But officially when we see the exchange rate between US Dollar and Kyat and US Dollar and Indian Rupee, Kyat has higher value. So, Indian traders don’t prefer to have trade legally and through banks.

Recent Developments:

1) Initiative to build a community/common check post and Manipur govt.’s readiness to give 48.5 acres of land out of 50 acres asked by India Govt.

2) India Govt.’s willingness to lift the restriction imposed on trade items of the Indo-Myanmar border trade. The Centre has sought the opinion of the State Govt. in this regard in the month of July, 2007. A report is being prepared to reply by the State Govt.

3) Steps taken up to open a bus service from Imphal to Mandalay. Discussion has been done among the state officials and opinion has been sought from the Centre.

4) North East India Investment conference organized by Development of North East Region (DONER) Ministry along with Confederation of Indian Industries (CII) on 26th Sept. 2007 held at New York. Honorable Chief-Minister, O. Ibobi took part in the conference along with leaders of PSUs, policy makers and many other experts.

5) North East Investment week:

To encourage businessmen to invest in North Eastern States of India, the Ministry of Commerce, Govt. of Thailand hosted North-East Investment week at Bangkok from October 1 to 4, 2007.

Conclusion:

Though there are a number of stumbling blocks in the way of progress of the border trade between India and Myanmar, in the year 2006-07, there is a huge increase in the volume of trade through Moreh. There is also enough potential for further growth of trade between the two countries. Government of India has taken up certain initiatives to bring further progress of the trade. But, the important thing is that state government should also frame certain strategic industrial and economic policies so that our state can be benefited from this cross border trade. Steps should be taken to streamline the illegal trades and state police and security forces should be sincere and honest in performing their duties. Special emphasis should be given towards the development of quality, skillful and standardized human resources in the state.

Reference:

1. Country Profile: Myanmar, Civil Services Analyst, March 2007.

2. Dr. R.K. Nimai Singh, ‘Formalities Required for Indo-Myanmar Border Trade’, Souvenir for

Seminar on Indo-Myanmar Border Trade, 2004.

3. Gaigongdin Panmei, ‘Indo-Myanmar Border Trade’, Souvenir for Seminar on Indo-Myanmar Border Trade, 2004.

4. K. Ibo Singh, ‘Indo-Myanmar Border Trade, Imperatives and Present Status’, Indo-Myanmar Border Trade Status, Problems and Potentials, Edited by Guru Das, N. Bijoy Singh and C.J. Thomas.

5. Office record of Customs Preventive Force, Moreh.

6. Office records of Directorate of Commerce & Industries, Govt. of Manipur.

7. Sangai Express, dated 21/08/07 vol: VIII/323.

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* The paper is written by Dr. A. Rajmani Singh and Ksh. Ranjan Singh

* The paper was originally published in Research Update June – November, 2007

* Research Update’ is an interdisciplinary research journal published biannually by the Manipur University Research Club, Manipur University Canchipur, Imphal-795003, Manipur.

*The Journal is dedicated to the students, young research scholars and established scholars associated with the University and people from various disciplines and professions. The journal aims to bring together diverse thoughts and opinions for the advancement of society.

*The journal aims to cover articles from School of Sciences, Social Sciences and the Humanities.

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