India-China border trade through Nathu La delayed

Neighbours defy deal asking traders to pay duty

The traders did not pay up as the products they were carrying were all listed for duty-free export from India to China in Delhi-Beijing Memorandum on Expanding Border Trade. Sikkim government informed the Ministry of External Affairs (MEA) about the complaint of the local traders on the Chinese officials’ demand for custom duty for export from India.

“We have written to the MEA requesting it to take it up with Chinese government so that the border trade could be restarted at the earliest,” K Kafley, Director of the Sikkim government’s Department of Commerce and Industries, said over phone from Gangtok.

This year’s border trade through Nathu La was scheduled to start on May 2 last, but it was initially delayed for two days due to inclement weather.

“We went to the border on May 4 to cross over to the other side with our merchandise. But we were told by the Chinese officials that they would not recognise the list of items for duty-free export from India and would levy duty for each kilogram of our items,” Nim Phuti, president of the India-China Border Trade Association in Sikkim, told Deccan Herald on Wednesday. India and China signed a Memorandum in December, 1991 on the Resumption of Border Trade and followed it up with a Protocol on Entry and Exit Procedures for Border Trade in July 1992.

New Delhi and Beijing later signed a Memorandum on Expanding Border Trade on June 23, 2003, recognising Nathu La as the third point for border trade between India and China, the other two being Lipulekh pass in Uttaranchal and Shipki La in Himachal Pradesh. Finally, on July 6, 2006, the local traders of Sikkim and Tibet Autonomous Region formally started trade through Nathu La, thus reviving a historic link.

Duty-free export

Over the past five years, traders with their merchandise from one side travelled to the other side with passes issued by local authorities and sold their stuff in the marts set up on both sides.

According to the 1991 and 1992 Delhi-Beijing deals, India can export 29 items to Tibetan Autonomous Region duty free. The Tibetan traders on the other hand can export 15 items to India. “We had taken only the items identified for duty-free export from India. So we did not pay up, when the Chinese officials demanded duty from us,” said Phuti. She said: “We will resume trade only after the issue is resolved.”

The local officials, however, are not ruling out the possibility of confusion and misunderstanding due to language barrier between the Indian traders and Chinese officials. The total value of export from India to China through Nathu La grew from Rs 8.87 lakh in 2006 to Rs 4.02 crore in 2010. But the value of import from China to India came down from Rs 10.83 lakh in 2006 to Rs 2.96 lakh in 2009. The border trade in 2010 ended with no import from China to India.

The local traders said that the list of the 15 items identified for duty-free import from China to India was obsolete and most of those, like yak tail, goat skin, yak hair, sheep skin, had no demand on the Indian side of the border.