Zokhawthar : A deserted space between the Act East Policy and the formalisation of border trade

Much has been speculated on the nuances of the Act East Policy (AEP) and its economic implications in India’s northeast. Rounds of seminar, workshop, symposium and series of publications by experts on this issue augmented the debate over the last decade. As northeast India shares international boundary with China, Bhutan, Myanmar and Bangladesh, the discourse on AEP attracted and critically engaged number of academics, policy makers and professional experts for a substantial period. Until then, our perception on the absolute operation of AEP and its sustainability in this region continues.

Initially, up gradation of some of the existing land custom stations (LCSs) into Integrated Check Post (ICP), formalization of trade across the designated border points and proposal to establish more international border haats appeared as an upshot of the AEP.

As a result, Agartala (Tripura) LCS corresponding to Akhaura of Bangladesh and Moreh (Manipur) LCS corresponding to Tamu in Myanmar was upgraded into ICP and became operational under the Land Port Authority of India (LPAI) in its first phase. Existing LCSs, i.e., Dawki (Meghalaya), Sutarkhandi (Assam), Kawarpuchiah (Mizoram) are waiting for its upgraded completion. It is expected that, strategic LCS like Zokhawthar will be promoted as ICP soon as a part of AEP initiative.

Currently, four border haats are operational, along the India-Bangladesh border; Kalaichar and Balat border haats in Meghalaya and Srinagar and Kamalasagar in Tripura. There are no border haats in operation along the Bhutan and Myanmar borders. Due to strategic reasons, possibility of setting a border haat is not there with China.

In addition to the four functional border haats, Government of India and Government of the People’s Republic of Bangladesh have approved six more border haats- two in Tripura at Palbasti and Kamalpur and four in Meghalaya at Bholaganj, Nalikata, Shibbari and Ryngku. According to DoNER report, respective states of the northeast have suggested more locations to the MoEA for setting up of border haats, which are lying for approval.

At a time, when the discourse on operation mechanism of AEP and its implications getting its momentum, already initiated measures like formalization on cross border trade and subsequently imposition of GST on traded items are conflicting the trend. It is premature but only true to opine that formalization is leading to more informlization of trade in the northeast.

We can consider the case of Zokhawthar in this regard. The porous 404-km-long, Mizoram and Myanmar barrier is naturally divided by the river Tiau. Therefore, the Tiau is not merely a river; rather it reminds the existence of two sovereign nations just on the either side of this slim river. It pains the Mizos of the either side ringing that as long as the Tiau River continues flowing, the separation among them will remain for years to come.However, despite this political separation, they always remained shared and united through barter trade via Zokhawthar.

Zokhawthar stands significant for the Mizos in three raison d'être; firstly, it is the oldest and the only international barter trade point in Mizoram. Secondly, the natives of Mizoram revisit Rihkhawdar, the oldest Mizo village that is presently in Myanmar via Zokhawthar. Moreover, Rih Dil Lake is situated at a distance of about two miles from Tiau, and is within the village area of Rikhawdar. Both the Rikhawdar and Rih Lake bears historical and mythological importance for the Mizos. Lastly, the iron bridge eased the reunion of the Mizos beyond the border.

Until 2015, Zokhawthar recorded the highest volume of international barter trade in northeast India. The period from 1994 to November 2015 was considered as the booming period for barter trade volume. The formalisation of trade in Zokhawthar became effective in December 2015. The sudden restriction on this age-old trend has deserted Zokhawthar.

Presently, Zokhawthar is crying for its lost glory, as the barter system has been outlawed. Thus, the suspension bridge at Zokhawthar today hauls less traffic and traders these days which otherwise remained busy throughout the day.

Sharing the aftermath of formalization, L.N. Kham, Superintendant, Custom Preventive Force, Champhai said, “After the normalisation of trade the central government directed the customs department to levy only 4%, we were following this instruction in levying the duties From January 2015 to august 2016. During that time the price of beetle nut was Rs.170/- per kilo. However, when Custom and Revenue Audit Department from Kolkata came here in august 2016 they questioned as to why the duties are not levied on basic things. We did not levied duties on basic items from Myanmar following the norms as it comes under Least Developed Countries (LDC). Nevertheless, from September 2016 onward, we started levying on basic items as directed. Thus, the total duties to be levied come into 47%, which directly affect the trade.”

From January 27^th, 2017, the rate of beetle nut has been revised by the Central Board of Excise and Customs board later renamed as Central Board of Indirect Taxes and Customs referring to the notification issued by the DGFT that it cannot be less than Rs.251/- per kilo which otherwise was Rs.170/- per kilo earlier. Which means it has increased Rs. 80/- per kilo. Even the duty is increase from 4% to 45%. For 20 metric tonnes of beetle nut, they have to pay around 20 lakhs through bank, which means they have to spend around 74 lakhs including buying price and duties. During the barter system, government never concerned about the procurement but after the normalisation of trade, it is said that procurement of goods has to be done through bank, which hampers the traders on their regular and normal transaction.

Presently, beetle nut and black pepper is the most common item that is traded through Zokhawthar. However, after the imposition of GST and formalisation of trade, it has decreased manifold. The traders (importers) have to go through various formalities and paper work like procuring the Country of Origin Certificate from the Add. Director of Export and Import, Myanmar government and the long procedure of Lab test which has to be done in Imphal, since Mizoram has no Food Testing Centre. In addition, in a complex banking procedure, the traders have to pay the custom duties in SBI Champhai and pay the FOREX in IDBI and HDFC Bank which is a lengthy procedure too altogether.

“After the formalisation of trade the same process has to go through even from the Myanmar side. If the traders want to export commodities, they have to sign a Sale Contract. The Indian government prepare the invoice and the cost price has to be deposited through their bank i.e. bank in Burma, located in Tidim or Tahan which is far away from Zokhawthar based on which the duty has to be paid. Going for formal trade encounters difficulties from Myanmar side, as they are not much concerned with the procedure notified by GoI. For this year, export is almost nil until date. Therefore expanding the formal export from this point is very limited,” said Kham.

During the field study, it was observed that goods from third countries and items of basic needs for local consumption are traded in informal form through this point. However, people never count it as illegal. Even the government (Custom official) could not stop them. As the porous 404-km-long, Mizoram and Myanmar barrier is naturally divided by the river Tiau. Moreover, the same ethnic communities distributed in the either side of the border eased them pampering in informal exchange.

From Zokhawthar to Tidim (53 kms) and Tahan (200 kms) in Myanmar, majority people belong to Zomi community. As they affiliate to the same cultural communities in Mizoram, people cross the river to meet their relatives without a Visa or other valid document. It has become more liberal after Aung San Su ki took over the Republic of Myanmar. Therefore, they realised it better to avoid complex formal trade through Zokhawthar.

During the barter system, people were allowed to trade or exchange only around 60 items for which they did not require paper work. After the formalisation, as per the official order, any items were allowed to trade however, the traders have to go through several paper works following a lengthy procedure like Lab Testing for goods from Imphal etc., which in fact has really discouraged the local traders to enter into formal trade. When GST was introduced, initially people thought that it will benefit the local traders but it has a negative impact on them. People even thought that normal trade will be better than barter system but it was not so.

There are two Land Custom Stations (LCSs) in Mizoram; the one here in Zokhawthar and the other in Demagiri (Lawngtlai district). Demagiri LCS is not functioning well. There is a proposal to set up a border haats in Vaphai and Hnahlan, which is yet to be executed. Therefore, the ban on the barter system through Zokhawthar is a big pause to the economic runoff in Mizoram.

After the imposition of tax in basic commodities, the volume of trade in Zokhawthar has gone down to its lowest level. The volume of informal trade cannot be included or recorded officially even if it flourishes. “Therefore taking into account of its present trade volume (formal trade volume), we can say that it may take time to upgrade Zokhawthar LCS into ICP as government decides to upgrade a particular LCS into ICP on this basis”, Kham speculated.

Debananda S. Medak

( Debananda S. Medak is a Research Associate at the OKD Institute of Social Change and Development, Guwahati. He can be reached at +91-8812822851 or [email protected] )

All photographs used in this feature were taken by the author.

"All materials including the interviews and photographs and field inputs used in this write-up have been collected as a part of the project Pivot to the East: Building Sustainable Economic Corridors in Northeast India undertaken by the Institute in collaboration with Sasakawa Peace Foundation, Japan."