Down and out in Nathula
Trade between India and China through Nathula, the 14,140-foot-high Himalayan border near Sikkim, has made no significant headway five years after it opened up for commerce between the two countries, says Debaashish Bhattacharya

Deadlock: The snow covered trade mart at Sherathang, about 5km from Nathula. Picture by Prabin Khaling
It’s quite a distance for a Sikkimese to travel for yak’s hair and tail. But then, Tibetans have to come all the way to this remote market for their jaggery and tea. If they are lucky, they can buy some snuff, and perhaps a tin of tobacco. And buyers on the Indian side can look forward to goat or sheep skin.

It wasn’t meant to have been like this. When India and China resumed trade on July 6, 2006, through Nathula, the 14,140-foot-high Himalayan border that had stayed shut since the 1962 war between the neighbours, it was a dream come true for many. Sikkim, after all, has had a long history of trading with its neighbour Tibet, Nathula being part of the old Silk Route.

Five years down the line, traders in Sikkim rue that the vision was a mere pipe-dream. “Who’s going to go all the way there to buy yak tail or yak hair or for that matter goat or horse imported from Tibet,” asks trader Gompo Tshering Bhutia.

The border trade — which takes place four days every week between May 1 and November 30 at Sherathang in Sikkim, 5km from Nathula, and Renquingang in Tibet — got off on the wrong foot this year. Because of bad weather, the opening was delayed by one day and then trade was suspended for two days after landslides blocked the road to Sherathang.

On May 4, when some traders tried crossing into Tibet, they were stopped by Chinese customs officials, says Bhutia, who is also the Indo-China Border Trade (Sikkim) Association general secretary. This led to a week-long boycott of trade by the Sikkimese, starting May 5. East Sikkim district collector D. Anandan, who issues some 300 “trade passes” every year to enable Indian traders to visit the trade mart on the Chinese side of the border without a passport or visa, says the issue has now been resolved, and trade has resumed.

But what’s clear is that traders are unhappy. Bhutia points out that a yak tail bought for Rs 2,500 in Tibet sells for barely Rs 3,500 in Sikkim. “It is simply not worth it.”

Under a 2003 agreement between India and China, only people from Sikkim and Tibet can participate in this border trade. Indians can sell 29 specified items, which include tea, coffee, dry fruit, snuff, jaggery, spices and tobacco. And they can buy 15 items, including yak hair and tail, used for religious rituals, goat and sheep skin, goats, sheep and horse and wool.


The list, the Sikkimese traders say, would have made sense half a century ago, but has few takers now. “There is a great demand for Indian biscuits, cooking fats and incense sticks in Tibet. But these don’t figure on the list,” rues another trader. “The list of items may not be very realistic in today’s context,” admits Sikkim chief secretary N.D. Chingapa.

No wonder Motilal Lakhotia has stopped trading on the border, even though he’d waited for almost 44 years for it.

Lakhotia, who travelled on horseback regularly from 1954 to 1962 with mules carrying merchandise into Tibet, was initially full of hope. “I went all the way to Tibet from Gangtok on the opening day itself,” Lakhotia, 85, says. But he and his sons have stayed away from the border trade in the last five years, for it makes no economic sense to them.

The list needs to be revised to galvanise traders — but this is something Sikkim says it is powerless to do. “It is for India and China to make or revise the list. We cannot interfere with it,” Sikkim commerce and industries secretary M.G. Kiran says.

Union commerce minister Anand Sharma did not respond to requests for an interview. But commerce ministry sources say a request for a revision, received from the Sikkim government, has been forwarded to the ministry of external affairs, which will have to take it up with Chinese authorities.

Economic projections for Nathula trade — and the resultant expectations that it would alter not just the economic landscape of Sikkim but of the entire eastern region — painted a rosy picture.

A Sikkim government study, prepared by economists and trade experts led by Mahendra P. Lama of the Jawaharlal Nehru University in 2005, predicted goods worth Rs 206 crore flowing through Nathula by 2007, rising steadily to Rs 2,266 crore by 2010.

Even in a worst-case scenario, the study said Nathula would witness a trade volume of not less than Rs 353 crore by 2010.

According to the Sikkim commerce and industries department, goods worth only Rs 6.54 crore — both exports and imports — have flown through Nathula over the last five years.

Lama, now vice- chancellor of Sikkim University, says the projections were based on the assumption that it would be an open international trade and not a restricted border trade. For increased trade, he says there is need for basic infrastructures like roads and electricity and facilities like banking, transport and communications. “But unfortunately, that hasn’t happened,” the economist says.

The 54-km road to Nathula from state capital Gangtok is pot-holed and treacherous, with regular landslides blocking traffic. Though the Border Road Organisation is widening the road, the ensuing digging and blasting are triggering more landslides.

“The road condition on the Indian side is terrible and there is nowhere to eat or rest. We are doing this trade only because we want to see Tibet,” says merchant Sonam Bhutia, lauding the two-lane, all-weather road on the Tibet side.

What’s worse, Sikkim Chamber of Commerce president S.K. Sarda says, is that people have to go to the trading marts on either side in person for the trade. “In any international trade, you usually sit in your office, place orders and ask your bankers to pay through letter of credits. But here, you have to do everything in person, so naturally few established traders are inclined to engage in border trade,” he says.

Curiously, officers in the State Bank of India, which has a satellite office near Nathula, say hardly any traders exchange money even though all payments are to be made in US dollars.

“We stayed there for four days last year, but no traders came to us. We are short-staffed, so we locked the office and came away,” says Sonam T. Bhutia, deputy manager of SBI’s Gangtok branch, which runs the satellite office.

A Nathula trader says traders from both sides use the currencies of their respective countries for business, a practice officials call illegal.

That’s not the only illegal activity. Chinese flasks, blankets, carpets and beers — none of which figures on the list of importable items — are finding their way into Gangtok and adjoining towns, allegedly via Nathula, which is denied officially but acknowledged privately.

Intriguingly, the official import figure via Nathula for 2010 stood at “nil” while the export figure stood at a little over Rs 4 crore. “Then, the question one may ask is, what did the Chinese traders who came in droves in 2010 sell? Obviously, they sold items that were unlisted, so the official import figure for listed items stayed nil,” says Pema Wangchuk, editor of Sikkim Now, a local paper.

Sikkim’s lone Lok Sabha MP Prem Das Rai, a former entrepreneur, says the Centre has to demonstrate that it is serious about the trade. “If it is, it should build infrastructure and create a land port in Nathula and start doing trade systematically and substantively, if necessary in phases,” Rai says.

If not, octogenarian Motilal Lakhotia has a simple solution. “Seal the border and close the trade. Let me go with my memories of free and open trade.”