Dated: June 29, 2003

SIKKIM AFTER SINO-INDIAN PACT
IMPLICATIONS OF OPENING TRADE THROUGH NATHU LA

New Delhi : The 'flower of the mountains' Sikkim has traditionally been considered strategically important for India as it lies astride the shortest route from India to Tibet. This mountain state is bounded on west by Nepal, on north by Tibet, on east by Bhutan and on south by an Indian state West Bengal. Therefore, implications of opening trade through Nathu La pass are obvious.

Even before Sikkim joined the Indian Union in 1975, Sino-Indian relations had been at the lowest ebb for more than a decade, especially after Indo -China war of 1962. That is why, the idea of opening trade along the Sikkim border did not arise. Before the 1960s, Jalep La in southeastern Sikkim was the main pass for border trade and other activities between the two countries, China and Sikkim. The Nathu La pass officially came into the picture in 1994, when Mr Pawan Chamling became the Chief Minister of Sikkim and demanded resumption of trade on the “Silk Road” between India and Tibet that runs through the Nathu La pass.

The officials of the Government of India did not agree to it on strategic grounds, although the relations between India and China had been improving for several years. The very suggestion of the idea of opening the Nathu La pass was laughed off in New Delhi as unrealistic. Then came the year 1997, when China proposed the idea of opening trade along the borders of Sikkim. It was further resisted and stalled by officials mainly for security reasons. Now , in 2003, the Prime Minister Atal Behari Vajpayee has signed an accord with his Chinese counterpart to open up border trade through the Nathu La pass.

Has all the security risks vanished now ? The question is important , and the time to come will unveil the real problems and all other risks. For the moment, all eyes are fixed on the economic implications of the newly signed border trade agreement between New Delhi and China.

The direct offshoot of the Sino-Indian border agreement came within a couple of days after signing of the accord. The Government of India has now declared Sikkim a virtual excise haven. According to a Union Finance Ministry notification issued on June 25, just two days after the agreement, all new units engaged in 13 specified industrial activities and commencing production on or after December 23, 2002 in Sikkim will be entitled to a 10 year excise exemption. The industries granted exemption are wool and silk reeling , weaving and processing, food processing, pharmaceutical products, mineral based industries excluding crude petroleum oils , raising and processing of plantation crops like tea, oranges and cardamom, electronics including hardware and IT-related industries, precision engineering including watch making , floriculture, eco-tourism( hotels, resorts , spas, amusement parks and ropeways), handicrafts and handlooms, honey, medicinal herbs and biotechnology.

The notification is significant, for Sikkim has been declared as industrially backward state and the Department of Industries has already launched a number of promotional schemes. The latest excise exemption may attract more investment in the state including units for assembling of components imported from China. The exemptions have also been extended to the industrial units existing before December 23,2002 provided that they have undertaken a “substantial expansion by way of increase in installed capacity by not less than 25 per cent.”

It is now clear that the Government of India is serious about the proposed border trade. The decision to open trade along the border of Sikkim is thus going to enormously boost the developmental activities in the state. Here comes the risk of ecological and environmental degradation of the State, that is already suffering because of defence activities which necessitates felling of trees and other earth-works. The state is entirely mountainous and is still covered with dense forests where sal, simal , bamboo and other trees thrive. Some of the finest forests lie in the northern most areas in Lachen and Lachung. It has several hundred varieties of orchids and is frequently referred to as “botanist's paradise.” Therefore , the government is going to have a tough task of preserving the ecology and environment while implementing the MoU signed between India and China.

Being a completely mountainous region, Sikkim has a poor transport infrastructure. However, opening of border trade would automatically involve a dramatic upgradation of the state's transport infrastructure. It, along with creation of other trade facilities, is a time taking process even if the process of implementation of the bilateral agreement is not trapped in the usual bureaucratic delays.

It is a long standing demand of the state to link Sikkim with the rest of India by roads. It is in this connection Sikkim has been demanding a link road to Golden Quadrangle road network. There is only one national highway No. 31-A that that links Sikkim to West Bengal. Mr Vajpayee has already promised an alternative to this national highway that joins Sikkim to Siliguri in northern West Bengal. There is another proposal lying with Airport Authority of India for an airport at Gangtok.

If the latest MoU for border trade signed between India and China is followed up seriously, and regular trade at Nathu La starts, not only Sikkim but also West Bengal, and all the north-east states , Bhutan, Nepal, and Bangladesh will be benefited. It may be mentioned here that before the early 1960s, Kalimpong in the north West Bengal was mail centre for commerce with Tibet. Now , West Bengal is also looking forward to take advantage of the new initiative. If opening Nathu La pass would prove beneficial, other passes like Kalimpong and Jalep La could be reopened.

Immediate offshoot will be felt in West Bengal, especially in northern part of the state. At present , Siliguri is the mail commercial hub of the region. Expanded economic engagement with China will attract the attention of Kolkata to invest more in the infrastructural development of northern West Bengal to get its benefit. There is a suggestion of upgrading Bagdogra airport to an international status. And if it is done , it could be a transit point for increased flow of tourists across China and the eastern subcontinent. (EOM)