Stilwell Route: What Are Its Economic Implications? – Analysis

By Jayasree Nath

There are two important viewpoints regarding the reopening of the Stilwell route as a trade road. The one in support considers the commercial development and overall trade benefit of the region. The other, in opposition, argues that there are existing cross-border trade routes through the Northeast via Sikkim and Mizoram to China and ASEAN countries which ought to be maintained and developed. In the midst of plans to look at other possible roads for trade, is it necessary to focus on Stilwell Road which is debated to have various security implications?

Considering the increasing trade relations between India and China this road has viable economic importance. Once the Stilwell road is operational, it will reduce the transportation cost between China and India which some experts argue will be around 30 per cent or more in current trade value. MK Saharia, the chairperson of the Northeastern Initiative of the Indian Chamber of Commerce pointed out that the broad-gauge railway connectivity up to Ledo which is also the starting point of Stilwell Road will help in the transfer of goods from other parts of India, and further on to China.

Beijing recently hosted the first ever India-China special talks on strategic economic cooperation, which is one step forward for their bilateral cooperation. On the Indian side, New Delhi is also hoping to get a positive response from China on the Indian pharma sector, which remains off-limits.

The Indian side of the road is in usable status and China has already turned the section in its territory into a six-lane highway. Although Myanmar has expressed its disinterest in opening the road, recent reports suggest that that construction has been started on their side of the border. Hence, the Government of India needs to hold some concrete discussion with Myanmar about the road. More border level talks and interaction between the business communities of both countries will be a major boost to this.

It is interesting to note that experts on and supporters of the operationalization of Stilwell road have only highlighted the India-China trade benefits and not Indo-Myanmar trade. Although India and Myanmar share an extensive boundary, the existing formal border trade is virtually nonexistent. Except for farm and forest products, most commodities imported through Myanmar by informal channels are largely products manufactured in China, ASEAN countries or even the Koreas and Japan. In contrast, the informal exports to Myanmar whose commodities are varied and range from basic necessities like medicines and kerosene to household consumption items are manufactured in India itself. Therefore, with Myanmar, there is huge potential to develop bilateral economic cooperation via this route which would also assist the growth of the Northeast. The agro industry is a feasible sector within which both countries can cooperate for intra-industrial cooperation.

Apart from producing agricultural surpluses, Myanmar’s coastal areas are also richly deposited with natural gas where a couple of Indian companies including the Oil and Natural Gas Corporation (ONGC) is already engaged in exploration and production. The Indian government is now moving forward to improve bilateral trade relations with Myanmar by increasing its investments in the latter. In addition, India has also offered to cooperate on a number of road projects, like the up-gradation of Tamu-Kalay and Rhi-Tiddim Roads and the India-Myanmar-Thailand Trilateral Highway Project.

However, there are reports that Chinese manufactured products have extensively penetrated Myanmar’s market. In such a case, will India have any opportunity in the markets of Myanmar? In certain items like medicines and fertilizers India still commands a substantial share. Indian manufacturers can set up a production base in the Northeast for catering to the markets in Myanmar and beyond, just as China has established production centres near the China-Myanmar border and even inside Myanmar to penetrate cross-border markets.

Apart from boosting trade between India-Myanmar and China, the road is also considered important for the development of the Northeast. The starting point of the road, Ledo, is in Assam, which believed to be the gateway to Northeast India and is well connected to all other Indian states. In the region, only Assam is connected by rail with other states in the rest of India. Assam and Arunachal Pradesh are very much in support of the road in view of the potential commercial growth and prosperity of the region.

The Northeast has ample potential in the agro industry, handloom, rubber industry, fisheries, poultry, fruit industries along with other industries such as oil, coal, limestone, tea which has yet to be explored. Assam is the most convenient place to develop a processing unit and explore the trade potential of Northeastern commodities. This will not only help to develop the export potential of Northeastern products but also help connect the Northeast to the rest of India. Under the aegis of the North Eastern Industrial and Investment Policy (NEIIPP) 2007 which declared the whole region as a Special Economic Zone, private businessmen can be encouraged to invest towards the infrastructure deficit in the region.

Jayasree Nath
Research Intern, IPCS
email: [email protected]