With feedbacks from the country's apex trade body, Bangladesh begins spadework on a hold-all economic-partnership deal with India by securing its privileged market access.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) recently submitted its recommendations to the commerce ministry to consider during negotiations on the proposed Comprehensive Economic Partnership Agreement (CEPA).
Formal negotiations are supposed to open with a view to signing the CEPA deal during Prime Minister Sheikh Hasina's upcoming India visit, scheduled for September 5-8.
The FBCCI has recommended securing the existing facilities under the South Asian Free Trade Area (SAFTA) agreement until minimum 10 years on Indian market even after Bangladesh's LDC graduation.
It has also suggested taking necessary measures to continue existing Rules of Origin (RoO) provisions in trading with the neighbouring nation.
A third cardinal point is securing the present trade benefits in the landlocked Seven-Sister States of India, where Indian supplies reach through waterway transit and land-route transshipment.
Besides, it has suggested keeping an eye so that the Indian investment policy can't hamper investment facilities in Bangladesh by the neighbouring country's investors.
Presently, Bangladesh enjoys special preferential market access as an LDC under the regional trading arrangement SAFTA. It is important to explore how such access may be retained after graduation, especially from the Indian market under SAFTA, an expert says.
But he believes it is "not easy to realise -- it will be very challenging".
SAFTA contains a provision of extending LDC preferences to the Maldives after graduation, he notes, adding that Bangladesh authorities concerned should take necessary initiatives to retain Bangladesh's privilege like Maldives' after graduation.
All but 25 tobacco and alcohol products of Bangladesh are entitled to duty-free and quota-free (DFQF) market access to India under the SAFTA deal as a least- developed country or LDC.
Bangladesh graduates from the LDC group in 2026 in a status-change process already in progress under the UN aegis. The country will lose preferential access to some of the global markets thereafter, trade experts and officials have said.
Thus, they say, Bangladesh needs to brace itself for navigating all obstacles on its way to access to global and regional markets for a smooth and sustainable LDC graduation into next trajectory of growth.
The CEPA on the anvil is a bilateral agreement between the two neighbouring countries -- Bangladesh and India.
According to a commerce ministry summary paper, Bangladesh's exports to India are expected to increase by 190 per cent and India's to Bangladesh by 188 per cent if the Bangladesh-India CEPA is inked.
The gross domestic product (GDP) of Bangladesh and India will increase by 1.72 per cent and 0.03 per cent respectively.
According to the 8th five-year plan of Bangladesh in the context of transition from LDC, the government has taken policy to sign regional trade deals (PTA/FTA/CEPA) with different countries to face possible risks after graduation, reads the summary paper.
Signing such a deal with large trade partners brings good results. However, it also involves revenue risk.
Bangladesh earned Tk 179.64 billion as revenue against imports worth Tk 144,160 crore (over 1.44 trillion) in the last fiscal year. The revenue earnings will gradually go down significantly after CEPA signing.
But, presumptions are rife that there will a positive impact on the overall economy and trade if the deal is implemented.
The country's overall exports to India reached US$1.99 billion in the last fiscal year (FY '22) in a 55-percent year-on-year growth.
Bangladesh shipped goods worth US$1.27 billion to the neighbouring country in the fiscal year 2020-21, according to Export Promotion Bureau (EPB) data.
The FY '22 export earnings surpassed the pre-pandemic level of US$1.24 billion in FY '19, the EPB data showed.
However, the country's trade gap with India continues to widen, notwithstanding. Imports from India increased considerably over the years, triggering a yawning trade gap, mostly in favour of India.
Bangladesh imported goods worth US$8.59 billion in the FY '21, according to data available with the central bank.
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