Vistas in Indo-Bangladesh trade
Tuesday, 18 December 2007
Amirul Islam
BANGLADESH'S bilateral trade with India has been a source of worry because of the high deficit in this trade for the former. But it deserves a close scrutiny whether only the deficit should be highlighted or whether other aspects need to be seen. For it is a fact that Bangladesh is more dependent on this trade than India and also gains from it in different ways. India's formal trade with Bangladesh is a small part of its total trade. But the scenario is very different for Bangladesh. India has become the one of the major sources of Bangladesh's imports.
The large imports from India are questioned. But one may see the value of the same in the backdrop of their cost efficient nature. The costs of raw materials and commodities imported from India are found to be notably less than from other sources. Besides, Bangladesh also gains from relatively faster delivery time which meets the production schedules of its industries and consumers. Recently, Bangladesh faced a series of natural calamities that drastically reduced its foodgrains production. The recent floods and cyclone Sidr caused havoc for Bangladesh's agriculture in recent months. Nearly 1.5 million tonnes shortfall in foodgrain production is feared in the country. India can be the best import source of foodgrains for Bangladesh in terms of both price and promptness of delivery.
The challenge as well as problem for Bangladesh is how to increase exports to India which, on average, have remained only slightly above one per cent of its total exports. If the exports can be rapidly increased, then the bilateral trade between the two countries may be more balanced and fruitful on the whole, as far as Bangladesh authorities are concerned. The bilateral trade deficit for Bangladesh has lately narrowed for the first time in many years.
This narrowing of the trade deficit ought to continue and to this end Bangladesh's exports drives to India need to be energised. Bangladeshi exporters usually complain about non-tariff barriers such as the latest one of a revival of a law from the pre-partition era of the subcontinent that requires toiletries to be imported to India only through three rail points instead of land ports. Then, there are other hazards such as elaborate certification requirements of the quality of export products. For instance, Bangladeshi cement producers were enjoying a good market in the north-eastern Indian states until the Indian authorities started stressing on proper quality certification of the same. While some local cement producers were discouraged from the insistence of obtaining such quality certification, a foreign company producing cement in Bangladesh, was not disheartened and went ahead with its plan to meet the certification criterion as demanded by the Indian authorities and also to ensure the quality of their exported products. Thus, this company is still enjoying good market access to India while others are lagging far behind. This only goes to show that given some tenacity and determination, Bangladeshi exporters can also gradually override the barriers of entry to the Indian market and go on substantially increasing their exports.
Specially, there is a wide and sustainable market for a variety of Bangladeshi products in the north-eastern Indian states and full exploitation of the opportunities in this market requires a proactive attitude and diligence on the part of Bangladeshi exporters. However, this is not to say that Bangladesh ought not to keep up the pressure on India for the latter to reduce or ease its willful impediments and bureaucratic procedures that frustrate the greater entry of Bangladeshi goods on a regular basis into the Indian markets.
But a two-track approach needs to be essentially followed by Bangladesh. Firstly, Bangladeshi exporters must themselves show more dynamism, innovativeness and staying power in prying open access to the Indian markets. Secondly, there has to be more negotiations on government-to-government basis so that Indian authorities cooperate in the creation of a level-playing field for Bangladeshi exporters.
BANGLADESH'S bilateral trade with India has been a source of worry because of the high deficit in this trade for the former. But it deserves a close scrutiny whether only the deficit should be highlighted or whether other aspects need to be seen. For it is a fact that Bangladesh is more dependent on this trade than India and also gains from it in different ways. India's formal trade with Bangladesh is a small part of its total trade. But the scenario is very different for Bangladesh. India has become the one of the major sources of Bangladesh's imports.
The large imports from India are questioned. But one may see the value of the same in the backdrop of their cost efficient nature. The costs of raw materials and commodities imported from India are found to be notably less than from other sources. Besides, Bangladesh also gains from relatively faster delivery time which meets the production schedules of its industries and consumers. Recently, Bangladesh faced a series of natural calamities that drastically reduced its foodgrains production. The recent floods and cyclone Sidr caused havoc for Bangladesh's agriculture in recent months. Nearly 1.5 million tonnes shortfall in foodgrain production is feared in the country. India can be the best import source of foodgrains for Bangladesh in terms of both price and promptness of delivery.
The challenge as well as problem for Bangladesh is how to increase exports to India which, on average, have remained only slightly above one per cent of its total exports. If the exports can be rapidly increased, then the bilateral trade between the two countries may be more balanced and fruitful on the whole, as far as Bangladesh authorities are concerned. The bilateral trade deficit for Bangladesh has lately narrowed for the first time in many years.
This narrowing of the trade deficit ought to continue and to this end Bangladesh's exports drives to India need to be energised. Bangladeshi exporters usually complain about non-tariff barriers such as the latest one of a revival of a law from the pre-partition era of the subcontinent that requires toiletries to be imported to India only through three rail points instead of land ports. Then, there are other hazards such as elaborate certification requirements of the quality of export products. For instance, Bangladeshi cement producers were enjoying a good market in the north-eastern Indian states until the Indian authorities started stressing on proper quality certification of the same. While some local cement producers were discouraged from the insistence of obtaining such quality certification, a foreign company producing cement in Bangladesh, was not disheartened and went ahead with its plan to meet the certification criterion as demanded by the Indian authorities and also to ensure the quality of their exported products. Thus, this company is still enjoying good market access to India while others are lagging far behind. This only goes to show that given some tenacity and determination, Bangladeshi exporters can also gradually override the barriers of entry to the Indian market and go on substantially increasing their exports.
Specially, there is a wide and sustainable market for a variety of Bangladeshi products in the north-eastern Indian states and full exploitation of the opportunities in this market requires a proactive attitude and diligence on the part of Bangladeshi exporters. However, this is not to say that Bangladesh ought not to keep up the pressure on India for the latter to reduce or ease its willful impediments and bureaucratic procedures that frustrate the greater entry of Bangladeshi goods on a regular basis into the Indian markets.
But a two-track approach needs to be essentially followed by Bangladesh. Firstly, Bangladeshi exporters must themselves show more dynamism, innovativeness and staying power in prying open access to the Indian markets. Secondly, there has to be more negotiations on government-to-government basis so that Indian authorities cooperate in the creation of a level-playing field for Bangladeshi exporters.