Nepal has achieved tremendous progress using the opportunities provided by the worldwide platform of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). Nepal is undoubtedly the market leader in the organization’s People-to-People Connectivity sector, which covers the cultural, tourism, and contact-based fora.
At the first Ministerial Summit in 2004, held in Bangkok, Thailand, BIMSTEC publicly recognized grassroots' participation as one of the most important foundations for achieving meaningful regional integration. Since then, Nepal has taken the initiative in all industries, including tourism, to improve its standing as a top travel destination. But Mount Everest, which attracts tourists interested in trekking and climbing, the Buddhist Circuit Tour, eco-tourism, and even medical tourism, has already helped this notion to expand.
The nation’s GDP increased by 7.9 percent over the past five years, primarily due to the revenue generated by visitors. In light of this, the Nepal government had pushed “Visit Nepal Year 2020,” with the declared objectives of enhancing the nation’s tourism infrastructure and linking its interior airports, which was later called off due to Covid-19 pandemic.
Today, Indian imports and exports account for around 64 percent of total trade with Nepal. India and Nepal facilitate trade in various goods, including ceramics, plastic products, petroleum, autos, equipment, food, and medications. India imports different Nepali items, including coffee, tea, garments, carpet, and intermediate goods. As a percentage of India’s total exports to Nepal, Nepal’s exports only account for 6.4 percent of the total. As a result, Nepal and India will have a hefty USD 8.3 billion trade deficit in 2022. Although India has a trade surplus with every BIMSTEC country except Thailand, Nepal accounts for over 40 percent of India’s trade surplus with BIMSTEC countries.
On the other hand, China represented 12.7 percent of Nepal’s total trade in 2020, making it the nation’s second-largest trading partner. Nevertheless, Nepal has yet to utilize Bangladesh’s offer to do business with non-Western countries by using the Chittagong and Mongla ports. Nepal cannot profit from its agreement with Bangladesh because India is unwilling to work with it to provide full transit facilities for third-country trade via ports in Bangladesh.
For the growth and prosperity of the area, Nepal should now work with other member nations to increase commerce, tourism, and investment, as well as to improve and extend physical and inter-human connections. Nepal should think about coming up with fresh ideas on some pressing issues. To help Nepal become a financial center in the area and restore its reputation as a desirable investment location, Nepal could start building a BIMSTEC Bank with its headquarters in Kathmandu. Economic solid integration would be promoted across the area via a BIMSTEC Bank. Poverty reduction is one of the fourteen priority areas of BIMSTEC, which Nepal leads. Similarly, Nepal must take the lead in developing the mountain economy.
A significant chunk of the Himalayas is present in Bangladesh, Bhutan, India, Myanmar, and Nepal, five of the seven countries that make up BIMSTEC. Mountains, which serve as the principal water source for the area, significantly improve food security, meet the world’s growing energy needs, preserve biodiversity, and promote leisure travel. Despite the complexity and fragility of mountain ecosystems, BIMSTEC member states should work together to identify the best possible set of policies for maintaining them while simultaneously safeguarding their great economic potential.
The relationship between India and Nepal, on the other hand, has recently hit a rough patch as a result of several issues, including border disputes over the regions of Kalapani, Limpiyadhura, Lipulekh, Susta, and others, China’s ongoing financial support for Nepal, as well as the Prime Minister of Nepal’s growing confidence in China, worries India. To promote agricultural sustainability, the other BIMSTEC countries must engage with Nepal since 81 percent of Nepali people are employed in agriculture. This will help the nation’s food industry and raise the per-capita income for the government. Nepal, which has the second-smallest GDP of all the BIMSTEC members, is one of the economically developing countries in this region. Despite the challenges, India and Nepal have shown in bilateral talks a determination to go beyond them and strengthen their relationship.
Nepal’s capacity to link to the rest of the world is essential for its economic development because of its remoteness and lack of infrastructure. BIMSTEC’s connection to the rest of South and Southeast Asia, the Bay of Bengal, and other regions comprises a network of roads, railways, sea connections, and air routes. It will be able to reach the ports of Kolkata in India as well as Chittagong and Khulna in Bangladesh. Establishing land and sea-based connections with Sri Lanka, Myanmar, and Thailand would be possible. These infrastructural upgrades will increase Nepal’s exports, and Buddhist pilgrims from its neighbours are essential to bringing its vision to a vital end.
(Keshav Verma is a PhD scholar and senior research affiliate at the Centre for East Asian Studies, Department of International Studies, CHRIST, Bengaluru, India.)
