Many of us expected that in the coming years, Bangladesh's exports to India would only go up as India promised to dismantle the lingering barriers. But the optimism has now taken a back seat.
The harsh reality is that the export growth to India fell back when Bangladesh otherwise is having a more than 12 per cent growth in its global exports. It was reported in the media that Bangladesh's exports to India totalled US$456.63 million in the fiscal year 2013-14 as against $563.96 million in the previous year, recording a negative growth of over 19 per cent.
During this period, the Indian exports to global market increased heftily and its imports from the outside world also recorded a robust growth. Then what had happened to Bangladesh's export to India? Why did it go down? This question should have haunted the minds of the Bangladesh policymakers, but they are complacent as Bangladesh's overall exports to global market recorded a big rise in the same fiscal year. Bangladesh's exports to India were always negligible compared to India's imports from the global market.
On the other hand, the Indian exports to Bangladesh never saw a decline. It went up steadily totalling $6.6 billion in the same fiscal year. The volume of trade between the two countries increased in the last few years, but the rate of increase was always in favour of India, further widening trade gap against Bangladesh. Bangladesh has been crying loud since long for bridging the trade gap between the two countries and the matter was taken up by Bangladesh time and again with India whenever opportunity came but seemingly without any result.
Bangladesh received oft-repeated promises of narrowing down the trade gap by removing the identified hurdles by India in the way of its exports. But in reality, those promises did not produce any result. We understand complete narrowing down of the trade gap is not possible. Even a widening in this respect is tolerable or in some cases, beneficial to Bangladesh, but we are at a loss to understand the reasons behind the fall of the country's exports to India, global exports of which increased continuously exceeding $30 billion mark in the fiscal year 2013-2014. As statistics say, Bangladesh's exports to India constitute only less than one-sixth of its global exports. Can Bangladesh improve on this? Yes, of course. But this will be needing sincere cooperation from India.
In Bangladesh, there is a widespread opinion that India only wants to sell goods to Bangladesh and is very reluctant to accept anything called Bangladesh's goods. Many studies were undertaken in the past to know why exports to India were not rising at the expected level. Those studies and our exporters rightly pointed out the barriers, but unfortunately the Indian side did never show any seriousness to remove those. India is more mindful of doing trade with other global markets but in case of Bangladesh, it possibly thinks it already has a guaranteed market. Maybe, Bangladesh does not have a better option to bypass Indian exports and it too welcomes with open arm Indian goods, forgetting any type of quid pro-quo barriers. There was never a trade war between India and Bangladesh.
However, the days of trade war and putting quid pro-quo barriers are the days of the past. Under the present global trade system, no country can completely shut its door or even put up arbitrary tariff barriers against the exports of other countries. Bangladesh and India are the SAARC members and they signed SAFTA agreements paving the way for increased export trade among the member countries. But unfortunately, the SAFTA or no SAFTA, Bangladesh has not been able to increase its export to India in the face of the latter's non-tariff barriers and other types of barriers.
Absence of freedom to open letters of credit (LC) by Indian banks, based in its eastern part, to import goods from Bangladesh is cited as a barrier by the Bangladeshi exporters. Does India deny exporters' allegation? If so, it should clarify its position to the satisfaction of Bangladesh.
It is said that a barrier is also imposed in the name of standard. India has made BIS (Bureau of Indian Standard) certification compulsory for Bangladesh's exports, which takes a lengthy time to be settled. Does India also impose the same standard for other countries' exports? Also, the Indian customs do not have any godown or warehouse for storing Bangladeshi exports at the border posts. Bangladesh's exports which are Indian's imports rot under the sun and are washed away by rain. Years after years, this problem was talked about but no solution was found. On the other hand, Bangladesh has constructed many godowns to store Indian imported goods and made also quicker custom clearance.
India also imposes state-level duty on the Bangladeshi goods. We do not have anything to say if the practice is the same in the case of imports from other countries. All the Indian delegations, visiting Bangladesh, promised again and again that India would remove any type of non-tariff barriers to Bangladesh's exports and also trim the restricted list of goods from our side. So it was hoped that Bangladesh's exports to India would increase by leaps and bounds. But the reality is so frustrating that any kind of promise will no longer convince anyone in Bangladesh. Many people think as Bangladesh failed to convince or at the minimum make the Indian side understand the necessity of lowering tariffs and dismantling non-tariff barriers, the country should bring in other issues that are related to Indian interests on the table while discussing the bilateral issues. Bangladesh always loses when it discusses issues separately but the country may win, or at least can have a better hearing from the Indian side, if it takes up all the issues together for discussion.
Bangladesh's record in export trade with other SAARC countries is no better either. The country sold smaller volumes of goods to other SAARC members like Pakistan and Nepal in the same fiscal year. But its exports to China made a big jump, rising up to almost one billion dollars. It should give a serious look at dismal performance in its exports to the SAARC countries.
Also, as the multilateral trade negotiation under the Doha Round got stalled, Bangladesh should see other ways to boost its trade. Other options for it are to negotiate regional and bilateral free trade agreements (FTAs). Many countries have so many FTAs that to most of them multilateral trade agreements are not so important. Bangladesh is the only country which does not have FTAs. Its negotiations for FTAs with Turkey, Pakistan, and Sri Lanka did not materialise. The country should strive to have meaningful trade negotiations with India with an objective of having a liberalised trade framework. Sri Lanka is having a better access to the Indian market under a bilateral trade agreement. Bangladesh also should look forward to inking a similar trade agreement with India.
The writer is a Professor of Economics, University of Dhaka. abuahmedecon@yahoo.com
Exports to India: Hopes dashed
Abu Ahmed | Published: August 27, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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