Business on a Silk Route

The euphoria for cross LOC trade is still on. As the trade delegation from AJAK has had several rounds of talks with different sections of the society people still busy themselves with the debates on the feasibility of the much hyped-about trade. While a large majority of people realize that the cross LOC trade is turning out (more or less) to be a damp squib, the disoriented lot is now shifted attention towards the trade prospectus on the dead and defunct, cliched Silk route in the unknown alien markets across central Asia, and beyond.

OS] The Silk Road Economic Belt - Chinese development strategy to build a  global infrastructure network [3708x2811] | Silk road, Economic map, Map

The issue is the hotly debated topic in the town in the conferences and in the seminars held here and there. With the nightmarish experience/ hangover of the economic blockade still reeling at the back of the minds, people reare the perception that the producers (and nations) with goods should not confine themselves in a single market, and stick themselves with one set of pipelines or trading routes, the frenzied people are frantically exploring means and methods to sell goods wherever they want. This is why routes to different directions and different markets silk road economic belt.

In the post Rose revolution (Georgia), Orange revolution (Ukraine), Tulip revolution (Kyrgyzstan) and the violent protests in Uzbekistan, the strategic location, energy resources, competition for pipeline routes and the other competitive advantages all helped China to carve out a niche and influence in the region. In view of the role that China plays in the Shanghai Cooperation Organization (SCO), the political direction and the way SCO conducts itself in the region India’s role, despite its claim about the compatibility with the dictators of the central Asia, has remained virtually as non entity.

Cumulative economic potential of the Greater Central Asian countries (including China and the South Asian countries) is seemingly high due to the significant human, natural and industrial resources. It is a market more than 2500 million people with an aggregate Gross Domestic Product (GDP) totalling more than half of the world GDP of $ 45135.2 trillion—three of the next generation economic powers of BRIC (Brazil, Russia, India and China) are located within and around the Great Silk Route). Central Asia is a huge consumer market hungry for goods/services like joint ventures in construction and building infrastructure, banking, insurance, agriculture, IT, pharmacy, tea, drugs, fine chemicals, exploitation of hydroelectricity for the export of electricity to its neighbouring south Asian countries. The current market players consist of Russia, Europe, other CIS countries, Turkey and China.

India, with GNI per capita of $720, huge resources, cost competitiveness and trade complementarity (export basket of agricultural products, textiles, gems, software services, technology, engineering goods, chemicals and leather products etc, and the ability to offer joint ventures in the sectors like decontamination of water (e.g. for Tajikistan), use of hydroelectricity, processing building materials like marble, granite, gems and help building semiconductor industry) has never been really part of any competition there. With no direct road or transportation access, plus difficult market conditions, the region never became attractive to Indian private companies. Indian economic relations with the region have declined considerably. In the last few years, the annual official trade between India and the whole of Central Asian region (compared to its total trade of US$130 billion in 2005) is about US$200 million, with Kazakhstan accounting for half of this trade. India does not exist anywhere in the composition of the countries in trade for CAR (Central Asian Republics) plus Azerbaijan and Afghanistan for the year 2005, which is clear from the following table.

The Central Asian market is avalanched with the menacing political conflicts, poor infrastructure, slow borders, too many formalities, arbitrary and aged bureaucratic delineations with the International Financial Institutions, administrative barriers, non-adherence to TIR convention (1975) and convention on Harmonization of Frontier Control of Goods (1982). The whopping foreign trade costs are not conducive for greater region-wide or continental trade. The countries in the region together with the IFIs are confronted with the myopia of stiff regionalism that hampers any greater Asia-Europe interaction let alone trade prospectus for us Kashmiris. The existing turbulent situation in Afghanistan and Pakistan (Kashmir conflict included); and the Indian involvement in the affairs of Afghanistan in league with the USA for the common interest of stabilizing Afghanistan and reducing Pakistan influence, coupled with the Chinese phobia for allowing opening of silk route to India (alias Kashmir) are no way trade-friendly for exploring potential of our trade on the silk route.

The trade basket projected from Kashmir valley keeps on being dominated as convention, by primary commodities with hardly any trade complementarity with that of the requirements in the target markets, be it across LOC or in the CARs. In a similar fashion, the trade profile of CARs also does not possess the complementarity with the requirements of our market place. It is therefore in view of all these factors too pre-emptive to foresee any economic integration between Kashmir and CARs in the near future. What is immediately required of us on the other hand is that we must shed off the monomaniac tendencies of groping-in-the-dark, and not are swayed by euphoria’s and market hypes? With out wasting time we need to concentrate on the grey areas of our economy to strengthen it to give it a turn to become an economic force. This will also call for exploring possibilities of developing our human resources, building and keep updating their skills import substitution, expanding and reorienting the basket of exports (in favor of services and value-added products with greater shelf-life and off-seasonality) in tune with the market requirements.