Tata returns to Bangladesh, to set up footwear, bicycle plants
Monday, 12 April 2010
FE Report
Top Indian conglomerate Tata Sunday signed a deal with its Bangladeshi partner Nitol-Niloy Group to set up footwear and bicycle plants here, as investors from New Delhi see Dhaka as a top destination for investment.
O K Kaul, executive director of Tata International, signed the memorandum of understanding with Nitol-Niloy's chairman Abdul Matlub Ahmad, sealing the Indian giant's first investment in Bangladeshi manufacturing sector.
Under the deal, the two companies would set up a large footwear factory with a capacity to produce 5,000 pair of shoes a day and a bicycle factory that will make one million bicycles a year.
All the items produced in the plants would be exported to Europe and North America where Bangladesh enjoys favourable trade access, Kaul said.
The MoU marks the return of the Tata Group back into the country's investment horizon, more than four years after it cancelled its US$3.00 billion investment plan in Bangladesh's steel, power and fertiliser sectors.
Kaul said the $70 billion Indian business giant with its interest ranging from salt to steel to software sees Bangladesh as one of the best destinations for investment.
"There are many other areas such as power and infrastructure where more opportunities are unfolding. But we have to wait for at least another six months before anything is finalised," he said.
He was speaking on the sideline of a seminar on 'Bangladesh as an Investment Destination' organised jointly by India Bangladesh Chamber of Commerce of Industry (IBCCI) and Confederation of Indian Industry (CII) at a city hotel.
Industries Minister Dilip Barua attended the seminar as chief guest, while State Minister for Science and ICT Yeafesh Osman, Indian High Commissioner to Bangladesh Rajeet Mitter, head of CII delegation Syamal Gupta and Country Officer of Citibank NA Mamun Rashid spoke.
Businessmen representing the two countries painted a rosy picture for Bangladesh economy, saying Dhaka would soon emerge as a global manufacturing hub thanks to its cheap labour and congenial investment climate.
They said Bangladesh's exports to India could double to US$1billion mark by June next year, driven by increased shipment of apparel, leather goods and bicycle.
Nitol-Niloy group chairman Ahmad, who also heads the IBCCI, said the entrepreneurs of the two countries would also set up at least 100 joint venture plants in Bangladesh by 2013 to export the produce to the rapidly booming India.
He said top conglomerate Tata and textile giant Arvind Denims have shown keen interest in new investments, lured by the country's cheap labour and close distance to the Indian market.
"The duty free access of Bangladeshi products to many parts of the developed world and India is one of the most attractive facilities for investing in the country," he said.
He said apparels would contribute 50 per cent to the projected one billion dollar exports to India, while the rest would come from other products such as leather goods, jute and bicycles.
Rajeet Mitter said increased infrastructure, connectivity, transport and customs facilities would boost Bangladesh's exports. "There is a valid reason for the trade imbalance between the two countries as Bangladesh traditionally imports raw materials in large volume."
"But Indian will work wholeheartedly to increase the volume of imports from Bangladesh. And I think the $1billion target has been fixed conservatively," he said.
"We have traditional investments in Bangladesh. The investment by Bharti Airtel will add new development," he said adding Bangladesh's favourable credit rating assigned by global agency Standard & Poor's would encourage foreign investors.
He said North and North-east India is Bangladesh's natural markets due to its geographical advantage comparatively to South and West India. "But Bangladesh needs to look beyond the North and North-east regions."
India's annual imports hover around $300billion against its exports of about $165 billion. "We will see whether we can buy more from Bangladesh as we buy goods and services from many countries," Mr Mitter said.
Dilip Barua said Bangladesh and India could mutually help each other to face challenges by exploring natural resources, strengthening connectivity and communication and creating common internal market.
"We can share industrial knowledge, wisdom, experience and expertise for mutual benefit," Mr Barua said.
Top Indian conglomerate Tata Sunday signed a deal with its Bangladeshi partner Nitol-Niloy Group to set up footwear and bicycle plants here, as investors from New Delhi see Dhaka as a top destination for investment.
O K Kaul, executive director of Tata International, signed the memorandum of understanding with Nitol-Niloy's chairman Abdul Matlub Ahmad, sealing the Indian giant's first investment in Bangladeshi manufacturing sector.
Under the deal, the two companies would set up a large footwear factory with a capacity to produce 5,000 pair of shoes a day and a bicycle factory that will make one million bicycles a year.
All the items produced in the plants would be exported to Europe and North America where Bangladesh enjoys favourable trade access, Kaul said.
The MoU marks the return of the Tata Group back into the country's investment horizon, more than four years after it cancelled its US$3.00 billion investment plan in Bangladesh's steel, power and fertiliser sectors.
Kaul said the $70 billion Indian business giant with its interest ranging from salt to steel to software sees Bangladesh as one of the best destinations for investment.
"There are many other areas such as power and infrastructure where more opportunities are unfolding. But we have to wait for at least another six months before anything is finalised," he said.
He was speaking on the sideline of a seminar on 'Bangladesh as an Investment Destination' organised jointly by India Bangladesh Chamber of Commerce of Industry (IBCCI) and Confederation of Indian Industry (CII) at a city hotel.
Industries Minister Dilip Barua attended the seminar as chief guest, while State Minister for Science and ICT Yeafesh Osman, Indian High Commissioner to Bangladesh Rajeet Mitter, head of CII delegation Syamal Gupta and Country Officer of Citibank NA Mamun Rashid spoke.
Businessmen representing the two countries painted a rosy picture for Bangladesh economy, saying Dhaka would soon emerge as a global manufacturing hub thanks to its cheap labour and congenial investment climate.
They said Bangladesh's exports to India could double to US$1billion mark by June next year, driven by increased shipment of apparel, leather goods and bicycle.
Nitol-Niloy group chairman Ahmad, who also heads the IBCCI, said the entrepreneurs of the two countries would also set up at least 100 joint venture plants in Bangladesh by 2013 to export the produce to the rapidly booming India.
He said top conglomerate Tata and textile giant Arvind Denims have shown keen interest in new investments, lured by the country's cheap labour and close distance to the Indian market.
"The duty free access of Bangladeshi products to many parts of the developed world and India is one of the most attractive facilities for investing in the country," he said.
He said apparels would contribute 50 per cent to the projected one billion dollar exports to India, while the rest would come from other products such as leather goods, jute and bicycles.
Rajeet Mitter said increased infrastructure, connectivity, transport and customs facilities would boost Bangladesh's exports. "There is a valid reason for the trade imbalance between the two countries as Bangladesh traditionally imports raw materials in large volume."
"But Indian will work wholeheartedly to increase the volume of imports from Bangladesh. And I think the $1billion target has been fixed conservatively," he said.
"We have traditional investments in Bangladesh. The investment by Bharti Airtel will add new development," he said adding Bangladesh's favourable credit rating assigned by global agency Standard & Poor's would encourage foreign investors.
He said North and North-east India is Bangladesh's natural markets due to its geographical advantage comparatively to South and West India. "But Bangladesh needs to look beyond the North and North-east regions."
India's annual imports hover around $300billion against its exports of about $165 billion. "We will see whether we can buy more from Bangladesh as we buy goods and services from many countries," Mr Mitter said.
Dilip Barua said Bangladesh and India could mutually help each other to face challenges by exploring natural resources, strengthening connectivity and communication and creating common internal market.
"We can share industrial knowledge, wisdom, experience and expertise for mutual benefit," Mr Barua said.