Analysis: Statism of Border Trade at NathuLa Pass (Sikkim) is backfiring on Indian traders?

Border trade between India and China is the highest at NathuLa Pass in Sikkim. Yet, its true potential has not been used. It was estimated in 2005 by a study group that this trade would fetch India Rs. 353 crores (2010) and Rs. 573 crore (2020). But in 2016, the trading value was only around Rs. 63 crore (exports) and Rs. 19 crores (imports). The Indian government needs to do a lot more to help its traders if China does not walk away with the goodies.

“If soldiers are not to cross international boundaries, goods must do so. Unless the shackles can be dropped from trade, bombs will be dropped from the sky.”Otto T Mallery, author of “Economic Union and Durable Peace”.

THIS quote emphasizes the significance of trade at the cost of war. No doubt when it comes to money, all are of the same religion. But it is important to realize that trade relations often dissuade tensions like war or conflicts on the macrocosm level. Ceteris Paribus (Other things equal). The economy of war is not always directly proportional to the economy of trade in the context of Indo-China ties. China’s realism and India’s reactivism have ratiocinated their relationship closer to the belief that “war is economy” in a span of 60 years. Their so-called geopolitical tensions can only be diffused through mutual consideration of liberal values and recognition of border trade. However, unlike other trading mechanisms, Indo-China border trade has not received attention in the mainstream sphere.

The idea of resuming border trade commenced in the early 1990s. It was only from July 2006 that China and India agreed to reopen certain locations at their border for economic trade, thus, helping their relationship and enhancing the socio-economic development of the localities near the trading region. Trading activities were closed after the 1962 conflict when China surprisingly defeated India. In order to supersede the past bitter relationship and enunciate steps towards mutual prosperity, three border trading points were identified from 2006 in India. They are:

Silk Route — The economic value of the border trade at NathuLa Pass, Sikkim, is the highest as compared to the other border points. It has also been the oldest route of trading since many centuries.

Also known as the “Silk Route”, NathuLa Pass (situated at 14,300 ft above sea level) is a strategic location of trade and geopolitics in the Northeast. As India has circumvented the inclusion of the Northeast in her growth story since 1950, NathuLa Pass has received limited attention from policy experts, authors, and scholars. Although the quantum of literature and study on this region does not beat the anticipated imagination in academics and media discussions, there is a dire need to rejuvenate India’s consciousness towards this region. Traders’ Numbers Increasing The NathuLa Pass region has been very popular for travel or touring, but more attention should be given to deciphering the economic health of traders in Sikkim.

There are 600 registered Indian traders who venture through NathuLa Pass from May 1 to November 30 every year. Out of these, around 200 traders are active. Only Sikkimese are allowed to trade and most of the traders’ have for generations been involved in this economic activity. Within a span of 10 years, there is a systematic increment in the registration of new traders, especially younger ones, which tells us a success story of border trade. It was estimated in 2005 by the Nathula Pass Border Trade Study Group that this trade would fetch India Rs. 353 crores (2010) and Rs. 573 crore (2020). But in reality, the data speaks otherwise. In 2016, a year before the Doklam issue, the trading value was around Rs. 63 crore (exports) and Rs. 19 crores (imports). India is entitled to export 36 items and import 20 items at this border with China.

Most of the items listed are from the 1950s and 1960s list and so traders of Sikkim are trying hard to lobby with the Indian government to alter the list as they’re more concerned about Chinese demands. Unfortunately, this whole issue has not received any attention. Every year, the traders have to undergo the Kafkaesque-like process of renewing their trading licenses. To add to the woes, the government of India has set a capital limit on the trade earnings.


Border Trade, as known, is understood for pacifying the geopolitical tensions or other forms of conventional conflicts between the nations. The case of NathuLa Pass between India and China, in this context, is of primordial significance. Restarted in 2006, since the 1962 debacle between India and China, the border trade at NathuLa Pass is gradually showing a tremendous volume of strategic importance in the areas of local development of communitarian economies, international relations between India and China. This chapter will decode and deconstruct the ratiocination, followed by suggestions that must be adhered to as soon as possible for further liberalization of border trade between India and China at Nathula Pass region and North East India’s sphere.

Constituting about 5% of the land area and 8% of the population of the nation, India’s Northeast region is one of the most complex in Asia, especially the South Asian continent, with about 200 ethnic groups, dialects and languages. Unfortunately, as observed, the Northeast Indian region has been aloof from mainstream discourse and policy attention till recently. This, in its other realm, caused structural impediments leading to fault lines in economical approaches and also facilitating secessionist tendencies/conflicts. The parochial cognition of policymakers based in New Delhi, in the last epoch so far, transcended inclusiveness and decentralized democracy.

The so-called import substitution economics since 1947 deprived Northeast India from reaping the trickle-down economics of socialism. Socialism as understood is privileged with the nationalization of factors of production and for a region like North East India (especially Sikkim) was infused with its own unique political tensions. Had it not been the ancient trade route aka silk trade route, the modernity of the Nathula Pass region had not received its due representation as witnessed today. The epoch of the cold war era did not turn out to be in favor of India, which eventually made Mainland China sustain its aggressive maxims. In this episode, India further drifted away from “acting [north] east” in its own geography…other than merely “looking [north] east”.

North East India is surrounded by Myanmar, Bhutan, China, and Bangladesh, and it’s connected and linked with the mainland [India] through what’s known as “chicken’s neck”, a very narrow strip of land with a width of 33 km only. Knowing such a peculiar geopolitical location, cross-border markets are favorably to be more cost-effective for North East India’s surplus production than the distant national economic markets. Albeit no reliable estimates are available on border trade, due to its inherent limitations, the potential for Indian exports to neighboring countries is unavoidable and nevertheless calls for a systematic, inclusive, and democratic genre of reflection with regards to trade policies and other social variables. Border trade and economic development in border areas are interdependent, as border trade leads to economic development and sociological salvation.

Border trade is contemporarily being viewed as one of the methods to generate growth impulse in the stagnant economies and thus by large also enhancing enrichment in social, political, and cultural relations. Prior to the 90s, political integration, ideologies and the so-called concerns for the security of north-eastern borders had been given more attention in the ‘state-centric view’ adopted by the Center towards India’s Northeast region. Gurudas Das, in a conference on Border Trade in 1998, notes that “neither the role of border trade in easing out the suffocation of the people living in the border areas nor its instrumental value in enhancing production, consumption, and industrialization could be visualized in a hostile political relationship with the neighboring countries.”

With special regards to the theme of this research study, the cue is that China and the Indian economy have undergone rapid transformation in terms of trade, liberalisation, structure of output, etc since 1978 and 1991 respectively. China’s advantage on industrialisation parameters, whereas that of India’s on service sector, are static since then. Amidst the recent cacophony between India and China on border skirmish at Doklam (2017) and discouragement of border trade since May 2020 due to covid-19 pandemic, the scope and fate of border trade between them via Nathula Pass shall continue to process inevitable sustainability of these two regional economies even at the cost of political egotism, if so.

The above premise may sound a bit hypothetical in the current observation but it’s inherently factual, after having done a ground survey of the traders at Nathula Pass, Sikkim, in the commencement stages of Border Trade in April-May 2018. On observing the incoming interests at BumLa Pass of Arunachal Pradesh, the research scholar of this study is of the view that the said region will also meet the same good fate as NathuLa Pass. As these two major economies continue to grow at a fast rate, in its international anarchic sphere, on global podiums, the postmodern features of so-called neoliberal trade policies cannot function without the destinies of ‘acting local, thinking global.’

In the case of India, the current political dispensation has inaugurated special interests for the Northeastern region through its realist politics, etc. East Sikkim, where NathuLa Pass is located, has an area of 954 sq. km. As per the 2011 census population, around 240,000 individuals account for 45% of the entire population of the state. As per the PCI (per capita income) data of these districts is estimated, the urban areas and rural areas assume to possess Rs 64,300 and Rs 45,895 respectively.

The circumstances are such that Sikkim and the other six sisters of Northeast India are inured with substantial Indian army presence. The Indian govt and its state’s apparatuses will have to undo the so-called catch-22 plight, in this case. As noted by Otto T Mallery, author of Economic Union and Durable Peace, in 1943: “If soldiers are not to cross international boundaries, goods must do so. Unless the shackles can be dropped from trade, bombs will be dropped from the sky.” On this note, inflating border trade relations (and also proselytizing the same into bilateral relations, as this chapter suggests) and defusing the geopolitical insecurities would be of mutual merit to the parties/states/economies enlisted/involved.

Agriculture is the major vocation of the people of East Sikkim. Terrace farming is practiced on the steep hill slopes. A shift, paradigm one, in the cropping pattern of the district from cereal-dominated subsistence agriculture to the production of cash crops for commercial agriculture, in recent years, is beholden. Making the 2/3rd populace dependent on agriculture. This, as a variable, can be a good support system to the border traders at NathuLa Pass who are extremely willing to have more liberalisation of their exporting list items.

Although the eastern region of Sikkim is prone to earthquakes, when infrastructure is overdone, at the same time the local inhabitants are known for scrapping 14 hydroelectric power projects (out of 32) in the whole state of Sikkim. The rationale of this context is to highlight a balanced view of development that does not negatively affect the ecological environment. The census of 2011 also divulges that the general sex ratio is 872 and the literacy rate is 84.67% which reflects a sound manifestation of the human/social capital of the individuals at Sikkim.

The government of India has subsequently approved North East Industrial and Investment Policy (NEIIP) 2007 with the Sikkim government also announcing various incentives for the industrial sector. It has also done the needful for the pharma sector. The Sikkim Industrial promotion and incentive act of 2007 was also beneficial to the speedy industrial development of the state. This goes in tandem with the opening of border trade in NathuLa pass in July 2006, albeit it was anticipated to commence a few years ago.

There are 333 companies in Sikkim and the major ones are into the production of biscuits, liquor, wooden and steel furniture, mill, bakery, noodle, ice creams, species, tea packaging, printing, and ready-made garments, among others. But, at the same time, establishing these local enterprises has been modest mainly because of improper market access and infrastructural bottlenecks.

On the Border trade realm, NathuLa trade was closed in July 1961. This same route is also part of the old silk route which was famous for trade. After 45 years, on July 6, 2006, border trade through Nathula was formally resumed. NathuLa means “listening ear pass” and it’s known as Gnauti in Tibetan. One of the first accounts of mountain passes in the Chola range of East Sikkim by British India officials in order to assess the possibility of trade with Tibet tells us that there was trade by locals even before the then official opening in 1904.

John Edgar War, the Deputy Commissioner of Darjeeling, was deputed in 1873 to inquire into the possibility of re-establishing Indian trade with Tibet. He was mandated to submit detailed information regarding the actual condition, extent, and prospects of trade with Tibet and suggest possible routes. He traveled extensively along Sikkim’s eastern border with Tibet and studied the three mountainous passes along with this axis — the Chola, Gnauti (NathuLa) and Jelep La. Extracted below is a portion of his diary entry on the visit to ‘Gnauti Pass’:

In some places, the ascent was rather steep, but I do not think that the pass is very much higher than Jeylep (in fact, Nathu La is slightly lower than Jelep La — ed); but it is said to be snowier, and I was shown a high cylinder of stone in the centre of the pass, put up as a guide to travelers at times when the track is covered with snow. The view of the Phari valley is much less extensive than that from Jeylep, but it gives one a better idea of the villages and cultivation of Choombi. A rather considerable stream flows from the Gnatui to the Mochoo, or Ammochoo, near Rinchingong (the Renquinggang of present times where the trade mart on the Tibet side has been set up-ed). While we were at the pass, a man from Guntuk (Gangtok-ed), with his wife, came up with a murwa of their own growing to the value of about six rupees, which they were taking to Choombi for sale. They said that they were meant to take the proceeds to Phari, where they would buy salt, which they would bring in to Darjeeling, where they might probably lay out the proceeds of its sale in an investment for the Tibetan market, if they found time to do so before next year’s sowing season. I mention this case, as it is a typical one. There was scarce a day during my stay in East Sikkim that I did not meet people either coming from, or on their way to, Darjeeling with goods, the value of which at first sight seemed quite disproportionate to the labour that had to be undergone in taking them to market; but I have no doubt they find the traffic pays them. These merwa-seller expected to get six rupees for their mera at Choombi, and with this sum to be able to buy at Phari four maunds of salt, which they could sell in Darjeeling for Rs 32, while the value of their murwa at Guntuk was only Rs 4 to Rs 8.”

This peculiar extract succinctly represents the fact that Tibet was not isolated from the rest of the world. This route facilitated international trade between China and India since ancient times. Swaran Singh in his research paper ‘China-India Economic Engagement: Building Mutual Confidence” (2005) highlights that “China learned from India how to make sugar from cane, how to decorate costumes and living spaces with beads, how to weave gold and silver threads into fabrics, how to enrich Chinese cuisine with black pepper, and how to make medicines from aromatic woods and tropical herbs. India learned papermaking and the use of the compass, in addition to sericulture and the silk industry from China and gained from such Chinese inventions like tea, gunpowder and printing.” It’s also stated that Buddhism also traveled through this route and even today the state of Sikkim continues to attract national as well as international tourists for its Buddhist lineage, except for the case of Nathula Pass where the international tourists are not allowed due to security reasons.

The trade was officialised via an agreement between British India and Tibet, against containing Russian geopolitical influence. Wool then emerged as a major commodity of trade and it continues to be one of the most important items in the list as designated even today. In those times, a newspaper ‘Tibetan Mirror’ used to highlight the number of items to be exported and imported and it helped traders then on the symmetry spectrum of enterprising, which was a good step towards the dissolution of information asymmetry. Although large traders then could afford warehousing facilities. With demarcation of borders and then the rise of Maoism in China helped small-scale traders at this pass as Chinese soldiers started buying watches, pens, surgical instruments, nail clippers, etc. State Bank of China in Tibet was established in 1952 and it offered interest-free loans to the Chinese traders. This led to a systematic development of trade.

As discussed earlier, for 3 decades, the trade route was closed after the war in 1962. India-China border trade heaved a sigh of relief again in the year 1992 (Lipulekh Pass, Uttaranchal) and the year 1994 (Shipki La, Himachal Pradesh), followed by NathuLa Pass, Sikkim, in the year 2006. This so-called reopening of border trade was to diminish tensions and conflicts and also help in ending economic isolation in these areas and at the same time playing a key role in boosting the market economy along with improving relations between two super Asian giants. The trade at Nathula Pass was supposed to commence in 2004 but security concerns delayed it. This reopening of border trade, including in Sikkim, is intended to gradually proselyte the hard trade into a soft one and it has a huge potential of conversion of border trade into bilateral relations. Nathula Pass gains more significance than Jelepla Pass because it’s lower in altitude and also closer to Gangtok, the capital of Sikkim. By this time, the researcher of this thesis study also believes that with further revision of export and import items list, as currently 36 items can be exported and 20 items can be imported, the decentralization of this border trade can also enrich the linkages associated with Nathula Pass and thus Kolkatta and Haldia like other eminent trading centres can be elaborately used for trading purposes.

Undertaken a primary observation on the field in 2018 during the trading season, the researcher of this thesis study could manage to speak to tens of traders, albeit 200+ traders arrive at the Sherathang trade centre, while there are more than 500 traders registered to practice the trade. All of them are Sikkimese. To break the ice between Sikkim and with rest of India, this trade has the potential to entice more unconventional measures because state-centric approaches do not work when market equilibrium is designed to work on its intrinsic merit. Speaking to a trader named Wongyul who was initially hesitant to confab with this research work, he said

“The items that are traded are duty-free but there are certain items of imports on which sanitary barriers are enforced and this somewhat expropriates the total value of cost.” He continues, “The commodities present in the list of imports previously were mostly animal products, and importing them was uneasy. As the traders required a certificate from the seller if they are buying yak’s tail. And if, for example, silk, are not of specified grade, anti-dumping duties were imposed.”

Other standpoint experiences from this venue are by Tenzing Bhutia, a trader, trading for the last few years,

“I used to export foodgrains, particularly rice, maida (flour) and biscuits and in return, we bought clothes, shoes, and handicraft. My annual turnover of export and import was well over ₹50 lakh and I am enjoying this trade but however the Doklam border issue in 2017 coincided during the trading season…affected my business. The gains in 2018 were not as anticipated because mild speculations prevailed amongst traders, regarding another security debacle. Such skirmish between soldiers from both sides affects our local economy.”

In 2006, the border trade started with exports worth ₹27.87 lakh and imports of ₹6.88 lakh. By 2016, the volume of the trade had multiplied 200 times. According to the figures provided by the Department of Commerce and Industries, Government of Sikkim, the value of exports from India to China at Nathu La in 2016 was ₹63.38 crore and the imports were valued at ₹19.30 crore. However, the long-drawn standoff at Doklam between the Indian and Chinese forces in 2017 had an adverse impact and trade dropped by almost 90%. Exports from India plunged to ₹7.83 crores while imports from China receded to ₹1.02 crore.

In a telephonic conversation with a trader Tashi Thendupza in 2019, “The trade did not do well because of the poor condition of the roads. Certain stretches had turned very steep and prone to accidents too. The year 2018 was an opening for us. On verification of data for the 2019-year trading season, the Customs put the exports at ₹40.31 crore and imports at ₹3.20 crore. Observation of an article in The Hindu newspaper on 12th September 2020, Sikkim’s commerce minister BS Pant was found saying that trade has been suspended due to covid-19 outbreak.

Ceteris Paribus, natural conditions like climatic changes and pandemic like covid-19 outbreak are unanticipated. At times, trading season at Nathula Pass commences by June/July instead of scheduled May due to unfavourable climatic issues like heavy snowfall, landslides, etc. The traders lose out their enterprising, neither they are obliged with any other form of income security, during the aforementioned predicament. Although some of these traders are into ancestral businesses, not all are also into tourism business which serves as an alternate plan for some. It has been observed that trading at NathuLa pass has methodically developed the tourism industry of Sikkim, especially around the capital city Gangtok. Many restaurants, hotels, views, etc have been positioned well to cater to the hospitable needs.

Since 2012 there has not been any revision in the list of export and import items, due to which at times few traders undertake informal businesses at NathuLa Border trade exchanges. This quantum gets uncalculated and it can have unnecessary ramifications in the long-term if the government from both sides do not regularly look into their own rules and provisions related to this trade since most of these traders interviewed believe that there is still statism of their economic freedom. For example: When the trading commenced in the year 2006, the capital limit on trading per day was Rs 25,000/-. In 2012, it was revised to Rs 100,000. Currently, it is Rs 200,000 which some of these traders believe that it infringes upon their trade’s total output and its value as — at times — it is in disequilibrium to the nation’s inflation and tax adjustment.

A trader who did not wish to be named informs this study that Chinese have well-developed infrastructure and warehousing facilities for their traders, whereas on the Indian side the traders have to leave before the scheduled time of trade. Thus, the Indian traders find it a bit expensive to take back their goods since they are not privileged to have overnight halting/storage facilities. Therefore, some of these traders appear at the trading centre only for stipulated days anytime between May to November (trading season).

Another ‘young’ trader by the name Tapan Pradhan emphasised on the “dire need to have a translator at this trading centre as Chinese traders speak Tibetan, whereas Indian traders are not able to decode their language well.” Tibetan is neither native to Sikkimese. Since most of these traders on the Indian side have almost limited educational backgrounds, English too becomes difficult to confab. Tapan is also of the view that Indian defense forces at times are rough in their conversation with the traders, when it comes to closing hours, and requests for ‘communication sensitisation’ contextually.

As informed earlier that this trade has an inherent merit to escalate more inclusions of goods and also people, in this epoch of globalisation wherein the supply-side economics is at competitive play. In order to dissuade certain existential features of agorist economics at NathuLa Pass Border trade, the government of India in collaboration with China can strategically limit its statism over the trade. This will also improve the relations between government and traders, and boost revenue of the government’s treasury, too. The role of government in this trade junction can be more focused on certain exigencies in terms of security, infrastructure development, interest-free loans and periodic revision of trade items’ list, or/and in also reaching out to more female participating in the trade (as this will also break the shackles of patriarchal notions associated with the trade).

Dr Mahendra Lama who studied for two years (2003–2005) about this trade and its potential, under the government’s assignment, before the commencement of this trade has come with grandeur expectations but unfortunately the outcome has not pragmatically infused in tandem with the report. There is a dire need to revive the same study with local participation from traders and their standpoint experiences too, so that intellectual masturbation can be curbed and on a wider note, the trading meet its essential requirements in the areas of economic liberalism, social and cultural osmosis, and anthropological networking. Verily the trade items can circumvent drugs, gold, guns and other products which can harm the sound relations (which in contemporary sense are not traded officially and unofficially) but a renaissance and reformation are of utmost importance in overhauling certain elements of this trade. At the same time, connectivity with NathuLa Pass, JelepLa and at BumLa Pass (Arunachal Pradesh) via Bhutan can be thought of (in the long-term).

Panu Pazo in 2013, for IPCS, writes in his research paper “India, China and NathuLa Pass: Securing Trade and Safeguarding the Ecosystem” that

“Besides Gangtok, there are several other smaller towns which function as commercial hubs but are limited in scope due to the lack of proper infrastructure. Given their proper development, these towns could facilitate manufacturing centres as well as markets for indigenous agro-based products in the region.” He also carefully highlights that the debate of the ecosystem, while boosting trade and connectivity, should not be misrepresented as it might harm the interests of the ecological environment. He continues, “The large-scale production of herbal and medicinal plants could provide raw materials for domestic and cross-border supply. With collaboration with the existing G.B Pant Institute of Himalayan Environment and Development, (Sikkim unit), conservation and production facilities of herbal medicines could be set up across the state creating a thriving industry. Pradhan and Badola (2008) have cited around 118 species of medicinal plants commonly used by the locals in the upper reaches of Sikkim and Singh and Rai (2002) have cited 64 medicinal plants that are the most common to the rest of the state. According to the Sikkim State government website, there are 160 different types of medicinal plants for various ailments. Bamboo cultivation and sericulture (silk cultivation) are budding industries of the state but are still under-researched. Technology and know-how could be developed indigenously or from foreign countries like China to develop its production. Secondly, poaching and general apathy for natural habitat preservation have been the cause for rapid deterioration of rare wildlife in the region. On this account, the state should seek to promote and establish a world-class breeding and research facility of rare mammal species like the snow leopard, red panda, Himalayan black bear, blue sheep, kiang, musk deer, etc. The establishment of a breeding and research facility should aim to restore the population of endangered species and to preserve them in the wildlife sanctuaries within the state. Establishment of above research facilities could have a twin purpose of encouraging eco-cum-wildlife tourism and also help develop research in the field of Himalayan ecology. A joint private-public undertaking between the forest and wildlife department, the tourism department and private tour and guide operators could initiate seasonal permission for safaris to some of the many wildlife sanctuaries but for a select and restricted number of tourists at steeply priced rates per season. Serious measures should be taken to check poaching and deforestation practices. These effective measures could fairly contribute to the enhancement of the state’s overall capacity in environment protection.”

Pramesh Chatri of Sikkim University has also furnished recently a comprehensive research paper on this issue and it’s timely. In his paper “India-China Border Trade Through NathuLa Pass: Prospects and Impediments”, he divulges that

“The state can export agricultural and horticultural products, dairy products, and forest products. Some of these items include cardamom, ginger, flora and fauna, dry chili, bamboo chopsticks, orchids, handlooms, bamboo saplings, medicinal plants, silkworms, woollen carpets, wooden carvings and thangka paintings. However, this list has yet to be finalized for trading by the two countries. Sikkim and surrounding areas could become a dry port. India is the largest producer of cardamom with 59.9 percent of the global market. Out of the Indian output, almost 88 percent of cardamom comes from Sikkim, which is the largest producer of large cardamom in the world. The cultivation of cardamom can play a dominant role in economically uplifting farmers in Sikkim, a state that produces few items, yet where it has a distinct comparative advantage in cardamom, ginger and other horticultural and floriculture products.”

On the factors of impediment, Pramesh Chatri comments that “there is a monumental difference in the goods being exported now compared to what was exported previously.” Hinting at the immediate revisionism of the list, this current thesis study is in sync with the arguments posed earlier in this chapter. He continues in his paper:

“The restriction of the natural flows of goods and services through the Nathu La has given a larger space for informal-illegal trade. There are more non-listed items and goods flowing through the informal trade routes than those listed items. A field visit to the Sherathang trade mart revealed that the major items for sale were not included in the trading lists, and are instead illegally exported and imported in bulk through this route. Based on personal interviews with traders, major informal export items traded at Sherathang in 2015 are dalda (hydrogenated oil), biscuits (Parle G brand), dalay (local chilies), sugar, and incense sticks. The major informal imported items traded in this route in 2015 are electronic items, such as watches, electric water flasks, mixers, cookery (e.g., glassware), and footwear.”

Intriguingly, two traders, Purba Chetri and Rabi contributed a different take on the collective attitude of Indian traders. They were of the view that Chinese traders are often integrated in their approach in terms of selling and negotiations, whereas Indian traders are not. Due to this, Indian traders sell at a lower price. They cited the example of how Chinese traders enter the Sherathang market centre at Nathula Pass around 11am and they do not buy anything till 1pm. As the trading hours come to an end, they at times make bulk purchases at the last moment and take advantage of disunited and competitive Indian traders’ enterprises. This is not so habitual but it can hint a lot about the aggressive strategies of Chinese traders.

On a final note, let this be informed that there is a grand volume of deficiency in studying the border trade between India and China. Compared to border trade between India and Myanmar, India and Bangladesh, India and Nepal, and India and Pakistan, the trade via NathuLa Pass is not obliged with volume of literature and policy attention. This thesis study endeavours to contribute in this regard and looks forward to careful attention from the respective stakeholders.

To proselyte this border trade at Sikkim into bilateral trade relationship, there is an urgent need to upgrade the infrastructure and systematic revision of trade items list. Ceteris Paribus on ecological environment, a balanced approach can cater to the needs of the region too. This trade holds a greater scope of employing local individuals from both the region and with time, it can be expanded with more gender inclusion and people of other territories.

More so, NathuLa pass has also emerged as one of the favourite tourist destinations. Thanks to the border trade here. When the scope of this trade is designated with expansionism, it can deter unnecessary tensions between India and China in this region and nearby region. As of now, most of these items are finding its ending in Sikkim itself. With inclusion from other regional territories, the trade can develop its own supply chain and logistics. Currently, the trade permit license is issued only to Sikkimese and the concerned traders have to renew it every new trading year. This level of bureaucracy also discourages some traders to seek new applications, while they engage in other employment opportunities.

In defense of informal trade at NathuLa Pass, Sikkim, between India and China

The geometry of statism certainly determines the quantum of interventionism through the apparatuses like regulations, limitation on capital earnings, bureaucratic kafkaesque, gradual or fabian functions of revising the trade list and other requirements, infrastructural lacunae, etc and this — on a macro spectrum — frequently distorts the natural equilibrium of trading processes. The case of informal trading at NathuLa Pass between Indian and Chinese traders is merely an outcome of unregulated statism, due to which the traders on the Indian side (as studied during the research) grimace.

The structural cause stemming from informal enterprising is because of the unrevived list, especially for the Indian traders. The dearth of ‘rime approach’ while designing the policies, from New Delhi, for the Sikkimese traders has systematically incentivised the generation of this genre of trade. In last century, the traders were comparatively privileged to trade plenty of more items that stay disbanded in the contemporary epoch.

The ‘rime approach’, as comprehended from Buddhist wisdom, manifests the tranquil coexistence of different schools under one roof. This approach, as introduced in this study, is to emerge as a constructive panacea in understanding that this informal trade needs to be legitimized rather than simply condemned, for the sake of it. That maxim: ‘whatever is legal, is not always moral’ compliments the nature of informal trade between India and China at NathuLa Pass, which mainly consists of perishable and durable goods than any hazardous equipment reported so far.

It is the inherent nature of economic freedom that whichever element burdens the organic development of trade would find its solace from the philosophy of agorism. As observed in this research study, the behavioral economy of traders at NathuLa Pass is involved in peaceful interaction. Agorism is this socioeconomic philosophy that devises a society to be functionally involved in voluntary transactions without violence and it has been in tandem with equilibrium of the informal trade. As a strategy for achieving political and economic change, agorism eschews practical politics, even casting a ballot, preferring the establishment and encouragement of new libertarian institutions to overtly political means such as campaigns and legislation.

Goods like chinese flasks, carpets, local beers, elaichi, milk, cheese, dalda (hydrogenated oil), biscuits (Parle G brand), local chillies (like dalay), incense sticks, sugar, watches, glassware, footwear, etc are informally traded between Indian and Chinese traders at NathuLa Pass route, in bulk, at times. Also, the traders are expected to trade using USD but many prefer to directly trade using Rupees-Yuan as currency mode.

The restrictive trade practices sustain the said informal trading and it continues, due to lack of legitimization of these traded items. When the informally traded items stand the deficiency of formalisation, traders would naturally continue to trade informally too because they feel pauperised from lack of recognition for their property rights.

36 items are listed for exports and 20 items are listed for imports, presently. In order to formalise the informal trade at this pass, there is a dire need to promptly revive the trading items list. If the policy-makers at New Delhi, Gangtok and at Beijing continue to apply lackadaisical approaches in their devices for NathuLa Pass border trade, the legal institutions will continue to miss out on socioeconomic engagements and benefits that can be incurred from the formal interactionism. The scope of border trade at NathuLa pass is of immense importance, as it is intrinsically inured with social as well as economic osmosis.

Note: This article was first published on OpinionCentral




A libertarian professor based in Mumbai, youtubing at times, and reading books all-the-time. I write too. Dhamma practitioner.

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A libertarian professor based in Mumbai, youtubing at times, and reading books all-the-time. I write too. Dhamma practitioner.

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