Demonetisation hits Indo-China trade: Traders unable to stock up good for export due to cash crunch
The Centre’s demonetisation move has taken a toll on India-China cross-border trade as traders in the state’s tribal areas have been unable to stock up goods for export due to the cash crunch.india Updated: Nov 17, 2016 11:39 IST
The Centre’s demonetisation move has taken a toll on India-China cross-border trade as traders in the state’s tribal areas have been unable to stock up goods for export due to the cash crunch.
The trade between the two countries, which is carried out through the Shipkila pass in Kinnaur district, usually gathers pace during mid-November every year, after the Lavi fair. Traders, comprising the inhabitants of villages bordering China-controlled Tibet, stock up goods during the Lavi fair and these goods are further bartered with traders in China-controlled Tibet.
“Prior to the Lavi fair, people remain busy with apple harvesting. It’s only in the month of November that they get free and trading picks up. But this time, the villagers trading with China were unable to stock goods for the cross-border trade,” says Jagat Singh Negi, legislator from Kinnaur, who is also the deputy speaker of Vidhan Sabha.
“Traders say that the banks in the tribal Kinnaur district do not have Rs 100 currency notes. There is a severe shortage of valid currency bills in the banks of Pooh subdivision,” says Heshe Negi, president of Kinnaur Indi-China traders association that comprises of 90 members. The banks are only providing us with `10 and `20 denomination that too has limit on withdrawal,” says Negi.
Chief minister Virbhadra Singh too admitted during the opening of the Lavi fair that demonetisation had hit the traders. The chief minister had even offered the state helicopter for ferrying currency notes to the tribal regions.
The district administration too is apprehensive about the impact that demonetisation would have on the annual trade. This year, 120 traders registered have themselves with the district administration for the cross-border trade. So far, only 90 traders have made trips to China. “Each trader is allowed to carry goods worth `50,000, but this year, the traders are making lesser trips,” says Negi. One trader is allowed to make the five trips each season.
Last year, India-China cross-border trade through Shipki La in Kinnaur district touched a new record with the total turnover of over Rs 9.72 crore, the highest ever since it resumed in 1994.
The trade registered a growth of 22% as goods worth Rs 4.36 crore were imported from China, while items worth Rs 5.36 crore were exported. In 2014 the trade between the two neighboring countries registered a turnover of Rs 7.32 crore.
This year, Indian-woven carpets, shawls, blankets ayurvedic medicines grocery items were in high demand in China. The major reason for leap in cross border trader last year was due to import export code (IEC) - necessary for import and export of goods to traders. In absence of IEC, the traders had to pay `25,000 each to customs department—a temporary post at Namgya—for a single cross-border trade.