The pipeline between India and Nepal should spur trade and connectivity in the region. Comment. (250 Words)

Mentors Comments:
1. Discuss the facts on just launched pipeline. What are the intended benefits of the project.
2. Mention challenges facing connectivity in the South Asian region
3. Suggest solutions to boost the economy of the region as a whole


Physical connectivity is directly co-related to trade, investment and development. The greater the connectivity, the higher is the prospect for trade, investment, and development. Engaging in creating and laying South Asia’s first cross border petroleum pipeline linking Motahari in India and Amlekhgunj in Nepal, the two neighbouring countries have come a long way fortifying relations.

The project is of strategic importance, alongside spur the trade and connectivity in the region-

  • The aim is to cement India-Nepal ties in the face of major inroads made by China into the Himalayan nation, and seeks to repair the trust deficit between the two countries due to an economic blockade seemingly imposed by India in 2015 to persuade Nepal to change some provisions in its new constitution.
  • The development comes against the backdrop of recent plans for a rail link between Nepal and China cutting through the Himalayas. There were also plans to link Nepal and China through an energy pipeline running through the Himalayas.
  • Both were seen as means by Nepal to find an alternative to its dependency on India and came on the back of tensions in 2015.

But, South Asia is one of the least economically integrated regions in the world-
1. Intra-regional trade has languished sitting around four or five percent of total trade. Compare that with ASEAN, where intra-regional trade stands at 25 percent of total trade.
2. The World Bank estimates that with barriers removed and streamlined customs procedures, intra-regional trade in South Asia would nearly quadruple: from the current USD 28 billion to over USD 100 billion.
3. Among 188 countries, India, Pakistan, and Afghanistan rank 131st, 147th, and 169th respectively on the United Nations’ 2016 Human Development Index and, as such, would stand to benefit from enhanced regional economic connectivity.
4. Presently, a multitude of regional economic projects exist to promote connectivity in South Asia. These projects include the China-Pakistan Economic Corridor (CPEC), the Iran-Pakistan-India (IPI) natural gas pipeline, and the Turkmenistan–Afghanistan–Pakistan–India (TAPI) natural gas pipeline.
5. However, as geopolitical dynamics intensify, economic gains face substantial obstacles in coming to fruition and improving livelihoods.
6. Importantly, these obstacles to improved regional connectivity are not exclusively regional in nature as they are also encumbered by global politics. One major hurdle to the IPI pipeline, for example, are American objections to Iranian involvement in the project, which has compelled the United States to even threaten sanctions against Pakistan if it pursues the pipeline.

Way forward

  • India must recognize that as in all other developing economies, Nepal’s aspirational young population is also looking beyond the open Indian border for opportunities, and its desire to turn his “land-locked” country into a “land-linked” country with a merchant navy must be considered positively.
     India needs to finish the infrastructure projects on time, for instance, the Pancheswar project has been pending for over 20 years now.
     Effective delivery on the pending projects, the remaining ICPs, the five railway connections, postal road network in the Terai and the petroleum pipeline so that connectivity is enhanced and the idea of ‘inclusive development and prosperity’ assumes reality.
     In addition to this, India need to complete ongoing/proposed projects like the BCIM Economic Corridor, IMT Highway, etc. It will not only connect and strengthen the Act East policy but will help to counter China’s BRI.

It’s time to expand transparent, high-standard regional lending mechanisms tools that will actually help nations instead of saddling them with mounting debt. While prospects for trade and economic benefits exist if present geopolitical tensions continue to drive economic and trade policy, the longer-term prospects for regional cooperation and strategic stability appear quite dim in South Asia.

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Abhijeet Kushwaha
11 months ago

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11 months ago

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Yogeshkumar Prajapati
11 months ago

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11 months ago

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Murari Jha
10 months ago