Expressing concern over the slow pace of talks for a trade agreement with the seven member countries of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) bloc, Commerce Minister Piyush Goyal on Wednesday said that there is a need to re-evaluate the approach to boost trade within the region.
The BIMSTEC bloc includes seven countries: Bangladesh, Bhutan, Nepal, India, Sri Lanka, Myanmar, and Thailand. The bloc has been negotiating a proposed Free Trade Agreement (FTA) since 2004, with 22 rounds of talks held so far including the last round that was held in 2018.
Speaking at the CII’s BIMSTEC Business Summit 2024, Goyal said that India is deeply concerned about the evolving situation in Bangladesh. “We wish the people of Bangladesh well and convey our best wishes for a smooth transition,” he said. Representatives from Bangladesh did not attend the summit amid violent protests in the country.
“I would like to raise a few fundamental issues about where we stand and what the possibilities are of making this FTA a reality… it could be the trade practices or current trade relationships that are preventing this FTA from taking place,” the minister said.
“Six years have passed, and no further negotiations have been held. I think the business community of the countries and the governments will have to work together to find new pathways, new ways of engaging, and alternative solutions that are more practical to build up the momentum towards an FTA,” he said.
He said that India considers the members of the bloc a “priority, as our first port of call, as we do hope that our friendly countries trust and look up to India as a friend and a trusted neighbor”. He noted that 22 rounds of talks have been held for the agreement, raising the question of whether “we need to pause and re-evaluate the direction we are taking.”
He also asked the business leaders of the seven countries to consider whether they need this agreement. The minister further suggested that member nations consider trade in local currencies to balance out trade imbalances.
“I would urge business leaders to give honest feedback on what you feel about the potential BIMSTEC FTA. Do you see merit in it? Do you see value in it?” he said.
Feedback from the business community would help political leaders make a decision on this.
“Maybe, we can begin with a PTA (preferential trade agreement) if not a full-blown FTA… But let’s examine the realistic possibility and move forward on a fast-track basis,” he said.
India’s total trade with BIMSTEC countries amounted to $44.32 billion in 2023-24. Thailand was India’s largest trading partner within the bloc, with exports worth $5.04 billion and imports at $9.91 billion, resulting in a trade gap of $4.87 billion. Bangladesh followed, with exports of $11.06 billion and imports of $1.84 billion, creating a trade balance of $9.22 billion in India’s favour.
Goyal added that trade between the BIMSTEC countries is still “small” and there is a long way to go to achieve its full potential. He called for strengthening regional integration and supply chains and ensuring trade on fair terms.
“We could look at payments in local currencies within this region,” he said, adding that areas where cooperation can be increased include better integration of custom borders, computerisation of border controls, and faster clearance of documents for imports and exports.