Suresh Prabhu launching World Bank report on regional trade in South Asia

Union Minister of Commerce & Industry and Civil Aviation, Suresh Prabhu, launched the World Bank Group’s regional trade report “A Glass Half Full-The Promise of Regional Trade in South Asia” at a seminar organised by FICCI in New Delhi today.

Speaking on this occasion the Minister said that the potential for intra-trade growth in South Asia region has not been fully tapped as yet. The Minister further stated that during his recent trip to Bangladesh talks on boosting trade between the two countries were discussed and Bangladesh Trade Minister along with a delegation has been invited to India to discuss trade and investment potential between the two countries and India and Bangladesh are already working on a Comprehensive Economic Partnership Agreement (CEPA). During the Minister’s recent visit to Bangladesh it has been decided to set up seven border haats some of which will start immediately. The Minister further added that the potential of services sector is yet to be explored in this region.

India’s top three trading partners in South Asia are Bangladesh, Sri Lanka and Nepal. India’s trade with South Asia is only 3% of its global trade. Today India’s trade with the world stands at 637.4 billion USD but with South Asia it stands at only 19.1billion USD.          

   Deeper regional trade and connectivity can reduce the isolation of northeast India, give India better access to markets in East Asia, and allow it to substitute fossil fuels by cleaner hydropower from Nepal and Bhutan. Trade between India and Pakistan is a paltry USD 2 billion. The book shows that without artificial barriers, this should be USD 37 billion.

 The book is written by Sanjay Kathuria and a team of South Asian researchers and it advocates an approach of open regionalism, using intra-regional trade as complementary to, and as a stepping stone for, deeper global integration.

Regional trade potential in South Asia can be unlocked through CEPA, border haats, and open regionalism boosting connectivity. Regional trade in South Asia remains underdeveloped and requires policy measures to reduce barriers and deepen integration. The report promotes open regionalism and calls for a Comprehensive Economic Partnership Agreement, establishment of border haats, services sector liberalisation and improved connectivity to expand market access, integrate disadvantaged regions, and enable cross border cooperation such as energy trade.