Ensuring mutually beneficial Indo-Bangladesh trade relations
Thursday, 28 April 2011
Shahiduzzaman Khan
This week's visit of Indian Commerce and Industry minister Anada Sharma, accompanied by a high-profile business delegation to Bangladesh, was considered by many as important for some obvious reasons. This has provided a fresh impetus to closer and mutually beneficial economic relations between Bangladesh and India. The outcome is positive in some areas while providing a signal about future cooperation in other related areas. Duty-free garment import quota from Bangladesh has been raised to 10 million pieces from 8.0 million under South Asia Free Trade Agreement (SAFTA). In the last three months alone, as the reports in the media say, India lifted 47 per cent of the 8.0 million quota. Overall, compared with US$ 304 million worth of total export to India in the last fiscal year, the first three quarters of the current fiscal have already witnessed receipts of US$ 359 million in the from of export earnings for the country. In fact, Bangladesh's export to India has increased six times in the last few years. But obviously the trend needs to move forward in more substantial ways to help bridge the bilateral trade deficit against Bangladesh and to help foster mutually beneficial trade and economic cooperation in a balanced way. Nevertheless, it's a good beginning. The Indian delegation indicated the possibility of investment to the tune of US$ 3.5 billion in Bangladesh's telecom, food processing, pharmaceuticals and manufacturing sectors by the Indian companies. The Indian minister hinted at materialising such investments in a few years' time. Indian telecom giant Airtel has already invested $300 million in Bangladesh and is expected to invest more. There are ample opportunities to diversify exports from Bangladesh, if the certification procedures are uncluttered. A technical team from India will visit Bangladesh soon to help Bangladesh Standards and Testing Institution (BSTI) upgrade its technology for easy acceptance of the institution's certificates in India. Bangladesh needs to follow up on the Indian assurances for considering its proposal to withdraw duty on 61 products including 54 readymade garment (RMG) items. Indian's lifting of duty on import of jute products and also supplying cotton under a special quota will also be considered mutually advantageous. On its part, Bangladesh will need to expand its supply capacity to export more and more goods to India on a competitive basis, if the market access is ensured with no overt or covert rider clauses about para- or non-tariff barriers. Increased Indian investments in Bangladesh will help provide new employment opportunities and value addition for Bangladesh's exports to the rest of the world. India now awaits Bangladesh's response to the draft modalities on transit and transshipment. It also welcomed the offer of use of Chittagong and Mongla ports and noted that this will provide immense benefits for trade and development of Bangladesh and the North-East of India. India has also offered to pay transit charges to Bangladesh. Furthermore, India has hinted at the possibility of making another $1.0 billion credit available for infrastructure development, mainly roads, in Bangladesh. Before leaving for home, the Indian trade minister made such an offer to his local counterpart. According to reports, Dhaka sent a message to Delhi to provide the policy guidelines and specific requirements relating to the proposed credit. India will respond further if Bangladesh expresses its interest in this connection. Bangladesh and India on August 07 last year signed a $1.0 billion credit deal, most of which are to be spent for development projects. Work on some of such projects will start soon. During the Indian minister's visit, Bangladesh's business leaders called upon Delhi to relax the service sector investment policy so that Bangladeshi entrepreneurs can invest there. India needs to take a pro-active stance on the issue, for opening up its services sector along with duty-and quota-free market access for all products from Bangladesh, under a Bangladesh-India free trade agreement (FTA) which may be put in place by this year. The Indo-Bangladesh bilateral relations suffered a lot in the past, due to mistrust and lack of political will. Instead of making progress in dealing with the urgent and thorny issues between the two countries, lack of trust held back the development of the bilateral relations for a significant period of time, particularly with regard to finding solutions to issues that are important from the Bangladesh perspective. Sadly enough, the Indian business conglomerate, Tata pulled of its $3.0 billion investment proposal due to Bangladesh government's delay in taking a final decision and inability to ensure uninterrupted gas supply for a 20-year period. For Bangladesh, good relations with India are critically important in strategic, economic, and geopolitical contexts. The sooner all concerned people do realise, and work towards, this, the better it will be the outcome for both sides. For that matter, India has to be pro-active in particular, in view of negative perceptions here in Bangladesh, for whatever reasons, about its 'big-brotherly' attitude. Without India according due significance to its neighbours in the interest of regional stability, balanced growth for materialising the shared vision of a resurgent new South Asia will make hardly any sense. It is true that bilateral economic relations between India and Bangladesh have, of late, shown signs of some improvements. Here, for improving relations between the two countries on a sustained footing, both the countries need to be careful about their political ramifications. To strengthen the economic ties, both countries should make earnest efforts sooner rather than later to resolve the pending disputes between them. As the largest neighbour, India is expected to demonstrate more responsibility to, and be more respectful to the legitimate rights of, its neighbours, in order to dispel misgivings of diverse sorts. No hegemonistic attitude will serve the purpose of fostering a climate of goodwill and understanding. The agreements, signed by the two countries, do need to be strictly adhered to, through appropriate follow-ups, as and where necessary. Both India and Bangladesh are otherwise potentially good economic partners in a win-win situation. More expanded bilateral cooperation activities in trade and investment areas will not only bring economic benefits for both sides but also act as a role model for other countries of the region. Undoubtedly, India is emerging as an economic powerhouse, and in the next few years, will become one of the world's biggest economies. Bangladesh remains at the threshold of this economic bonanza, with the opportunity to cash in on its neighbour's economic boom. This can only be achieved with far-sighted strategic outlook on a reciprocal basis. It is time to look beyond the narrow political ends, for coming up with pragmatic policies in a win-win situation for both sides, befitting the new global economic landscape. - szkhan@dhaka.net
This week's visit of Indian Commerce and Industry minister Anada Sharma, accompanied by a high-profile business delegation to Bangladesh, was considered by many as important for some obvious reasons. This has provided a fresh impetus to closer and mutually beneficial economic relations between Bangladesh and India. The outcome is positive in some areas while providing a signal about future cooperation in other related areas. Duty-free garment import quota from Bangladesh has been raised to 10 million pieces from 8.0 million under South Asia Free Trade Agreement (SAFTA). In the last three months alone, as the reports in the media say, India lifted 47 per cent of the 8.0 million quota. Overall, compared with US$ 304 million worth of total export to India in the last fiscal year, the first three quarters of the current fiscal have already witnessed receipts of US$ 359 million in the from of export earnings for the country. In fact, Bangladesh's export to India has increased six times in the last few years. But obviously the trend needs to move forward in more substantial ways to help bridge the bilateral trade deficit against Bangladesh and to help foster mutually beneficial trade and economic cooperation in a balanced way. Nevertheless, it's a good beginning. The Indian delegation indicated the possibility of investment to the tune of US$ 3.5 billion in Bangladesh's telecom, food processing, pharmaceuticals and manufacturing sectors by the Indian companies. The Indian minister hinted at materialising such investments in a few years' time. Indian telecom giant Airtel has already invested $300 million in Bangladesh and is expected to invest more. There are ample opportunities to diversify exports from Bangladesh, if the certification procedures are uncluttered. A technical team from India will visit Bangladesh soon to help Bangladesh Standards and Testing Institution (BSTI) upgrade its technology for easy acceptance of the institution's certificates in India. Bangladesh needs to follow up on the Indian assurances for considering its proposal to withdraw duty on 61 products including 54 readymade garment (RMG) items. Indian's lifting of duty on import of jute products and also supplying cotton under a special quota will also be considered mutually advantageous. On its part, Bangladesh will need to expand its supply capacity to export more and more goods to India on a competitive basis, if the market access is ensured with no overt or covert rider clauses about para- or non-tariff barriers. Increased Indian investments in Bangladesh will help provide new employment opportunities and value addition for Bangladesh's exports to the rest of the world. India now awaits Bangladesh's response to the draft modalities on transit and transshipment. It also welcomed the offer of use of Chittagong and Mongla ports and noted that this will provide immense benefits for trade and development of Bangladesh and the North-East of India. India has also offered to pay transit charges to Bangladesh. Furthermore, India has hinted at the possibility of making another $1.0 billion credit available for infrastructure development, mainly roads, in Bangladesh. Before leaving for home, the Indian trade minister made such an offer to his local counterpart. According to reports, Dhaka sent a message to Delhi to provide the policy guidelines and specific requirements relating to the proposed credit. India will respond further if Bangladesh expresses its interest in this connection. Bangladesh and India on August 07 last year signed a $1.0 billion credit deal, most of which are to be spent for development projects. Work on some of such projects will start soon. During the Indian minister's visit, Bangladesh's business leaders called upon Delhi to relax the service sector investment policy so that Bangladeshi entrepreneurs can invest there. India needs to take a pro-active stance on the issue, for opening up its services sector along with duty-and quota-free market access for all products from Bangladesh, under a Bangladesh-India free trade agreement (FTA) which may be put in place by this year. The Indo-Bangladesh bilateral relations suffered a lot in the past, due to mistrust and lack of political will. Instead of making progress in dealing with the urgent and thorny issues between the two countries, lack of trust held back the development of the bilateral relations for a significant period of time, particularly with regard to finding solutions to issues that are important from the Bangladesh perspective. Sadly enough, the Indian business conglomerate, Tata pulled of its $3.0 billion investment proposal due to Bangladesh government's delay in taking a final decision and inability to ensure uninterrupted gas supply for a 20-year period. For Bangladesh, good relations with India are critically important in strategic, economic, and geopolitical contexts. The sooner all concerned people do realise, and work towards, this, the better it will be the outcome for both sides. For that matter, India has to be pro-active in particular, in view of negative perceptions here in Bangladesh, for whatever reasons, about its 'big-brotherly' attitude. Without India according due significance to its neighbours in the interest of regional stability, balanced growth for materialising the shared vision of a resurgent new South Asia will make hardly any sense. It is true that bilateral economic relations between India and Bangladesh have, of late, shown signs of some improvements. Here, for improving relations between the two countries on a sustained footing, both the countries need to be careful about their political ramifications. To strengthen the economic ties, both countries should make earnest efforts sooner rather than later to resolve the pending disputes between them. As the largest neighbour, India is expected to demonstrate more responsibility to, and be more respectful to the legitimate rights of, its neighbours, in order to dispel misgivings of diverse sorts. No hegemonistic attitude will serve the purpose of fostering a climate of goodwill and understanding. The agreements, signed by the two countries, do need to be strictly adhered to, through appropriate follow-ups, as and where necessary. Both India and Bangladesh are otherwise potentially good economic partners in a win-win situation. More expanded bilateral cooperation activities in trade and investment areas will not only bring economic benefits for both sides but also act as a role model for other countries of the region. Undoubtedly, India is emerging as an economic powerhouse, and in the next few years, will become one of the world's biggest economies. Bangladesh remains at the threshold of this economic bonanza, with the opportunity to cash in on its neighbour's economic boom. This can only be achieved with far-sighted strategic outlook on a reciprocal basis. It is time to look beyond the narrow political ends, for coming up with pragmatic policies in a win-win situation for both sides, befitting the new global economic landscape. - szkhan@dhaka.net