The resumption of the historic Indo-China border trade through Shipki La after a six-year hiatus has run into fresh trouble, with traders in Kinnaur announcing a complete boycott of the trade in protest against the levy of Integrated Goods and Services Tax (IGST) on imported goods.
The Kinnaur Indo-China Trade Association on Wednesday unanimously resolved that none of the registered traders would participate in border trade with China through the 18,599-foot-high pass until the Centre exempts the trade from IGST, just as it has already exempted it from customs duty.
The decision was taken at an emergency meeting convened after the association received a communication from the Customs Department informing traders that IGST would be applicable on goods imported through the border trade route.
The traders contend that the imposition of IGST will make the traditional trade commercially unviable. They argue that the border trade through Shipki La is not a conventional import-export business but a centuries-old barter system and a confidence-building measure between India and China, aimed at sustaining the livelihoods of remote border communities.
Association president Hishey Negi said Customs Duty on goods imported through the notified border trade route had been exempted since July 23, 1996, in recognition of the unique nature of the trade. However, the introduction of IGST has significantly increased the financial burden on traders.
He said the trade is carried out under extremely challenging conditions, with goods transported largely on mules across rugged Himalayan terrain during a short trading season. Given the limited volume of trade, high transportation costs and difficult geographical conditions, the additional tax burden would make the exercise economically unviable.
“The objective of border trade has never been purely commercial. It is intended to strengthen frontier areas, preserve traditional trading practices, generate employment and improve the economic well-being of people living in remote border villages,” Negi said.
The association has urged the Government of India, the Ministry of Finance, the Central Board of Indirect Taxes and Customs (CBIC) and the GST Council to extend IGST exemption to imports through the Shipki La border trade route on the same lines as the existing Customs Duty exemption.
The association expressed hope that the Centre would appreciate the genuine concerns of border traders and take an early decision to protect the traditional trade and strengthen the frontier economy.
The border trade through Shipki La resumed on August 1 after remaining suspended for six years. The pass, located in tribal Kinnaur district, is one of the three notified Indo-China border trade routes in the country, the other two being Nathu La in Sikkim and Lipulekh in Uttarakhand. Traders from the villages of Namgiya, Chango, Chuppa and Nako participate in the annual trade.
The official trading season extends from June 1 to November 30, though commercial activity generally gathers momentum during October and November.
The trade, which resumed in 1992 after decades of closure, has witnessed steady growth over the years despite occasional disruptions caused by tensions along the India-China border, including the Doklam standoff. The trade volume increased sharply from Rs 8.59 crore in 2016 to Rs 59.21 crore in 2017.
At present, 36 items, including spices, carpets and tea, are permitted for export to China, while 20 items are allowed to be imported. The list of tradable items was expanded in 2012 with the addition of 12 new products. The traders maintain that unless IGST is withdrawn, the revival of this historic border trade may once again come to a halt.
